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, 2001

                                       OR

     [ ]  TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______


                        COMMISSION FILE NUMBER 333-35063

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

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


                           3570 U.S. HIGHWAY 98 NORTH
                            LAKELAND, FLORIDA 33809
           (Address of Principal Executive Offices including Zip Code)

                                 (863) 853-2882
                (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 $7,181,005.

As of March 1, 2002, the aggregate market value of voting and non-voting equity
Common Shares 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 $8,658,960. Since the Registrant's Common Shares are not actively
traded and are not traded on an exchange, for the purposes of this Report only,
the 865,896 Common Shares held by non-affiliates on such date have been valued
at the $10.00 per share offering price of the Registrant's cash public offering
that closed in May 2000.


<PAGE>


      ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS

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

Yes______         No_______


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<PAGE>

<TABLE>
<CAPTION>

                               BARON CAPITAL TRUST

                            FORM 10-KSB ANNUAL REPORT

                       FISCAL YEAR ENDED DECEMBER 31, 2001

                                                                                PAGE
PART I:
<S>                                                                               <C>
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 ...............53
Item 7   Financial Statements ....................................................60
Item 8   Changes In and Disagreements with Accountants on
         Accounting and Financial Disclosure .....................................61

PART III:
Item 9   Trustees, Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act .......................61
Item 10  Executive Compensation...................................................63
Item 11  Security Ownership of Certain Beneficial Owners and Management ..........63
Item 12  Certain Relationships and Related Transactions...........................65
Item 13  Exhibits and Reports on Form 8-K ........................................66
</TABLE>


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<PAGE>


                                     PART I

ITEM 1.   DESCRIPTION OF BUSINESS

General

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

     In May 1998, pursuant to a registration statement on Form SB-2, the Trust
commenced a public offering of 2,500,000 common shares of beneficial interest
("Trust Common Shares" or "Common Shares") at an offering price of $10.00 per
share ("Cash Offering"). The Cash Offering terminated on May 31, 2000. The Trust
has contributed to the Operating Partnership the net cash proceeds ($5,467,858)
from the sale of 702,076 Common Shares in the Cash Offering in exchange for an
equivalent number of units of limited partnership interest in the Operating
Partnership ("Operating Partnership Units" or "Units"). As of March 1, 2002, the
Trust had issued to the public 963,346 Common Shares.

     The Trust, together with the Operating Partnership, was formed to acquire,
own, operate, manage and improve residential apartment property interests for
long-term ownership, and thereby to seek to maximize current and long-term
income and the value of its assets. To this end, in 1998 and 1999, the Operating
Partnership used a portion of the net proceeds from the Cash Offering to acquire
indirect ownership of three residential apartment properties and a minority
interest in several other residential apartment properties. In addition, in
April 2000, pursuant to a registration statement on Form S-4, the Operating
Partnership completed an exchange offering (the "Exchange Offering") to acquire
equity interests in 23 real estate partnerships, which directly or indirectly
owned equity and/or debt interests in 25 residential apartment properties and
one condominium apartment property located in the southeast and mid-west United
States. (See "Brief Description of Properties - Acquired Properties" and "-
Exchange Offering" and ITEM 2 - DESCRIPTION OF PROPERTIES below).

     The Trust is the sole general partner of the Operating Partnership and, as
of March 1, 2002, owned 963,346 Operating Partnership Units, representing
approximately 24% of the then outstanding Units. Such Units are comprised of the
Units acquired by the Trust with the net proceeds of the Cash Offering and the
Units that holders of Units have elected to exchange into Common Shares in the
manner described below in this section.

     The Trust will make pro rata distributions to its Shareholders of net
income, if any, generated from investments in property interests as cash flow
allows. The Trust has elected to operate as a real estate investment trust
("REIT") for federal income tax purposes, provided, however, that if its Board
of Trustees determines, with the affirmative vote of a majority in interest of
Shareholders entitled to vote on such matter approving the Board's
determination, that it is no longer in the best interests of the Trust to
continue to qualify as a REIT, the Board 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 owns limited
partnership interests or other equity interests in limited partnerships and
other entities that own direct or indirect interests in properties. The Trust is
the sole general partner of the Operating Partnership, and, in such capacity,
the Trust controls the activities of the Operating Partnership. The operations
of the Trust are carried on through the Operating Partnership (and any other
subsidiaries the Trust may have in the future), among other reasons, in order to
(i) enhance the ability of the Trust to qualify and maintain its status as a
REIT for federal income tax purposes, and (ii) enable the Trust to indirectly
acquire interests in residential apartment properties in exchange transactions,
such as the Exchange Offering, that involve the exchange of Operating
Partnership Units for limited partnership interests in limited partnerships
which directly or indirectly own such property interests, and thereby provide
the opportunity for deferral until a later date of any tax liabilities that
sellers of partnership interests otherwise would incur if they received cash or
Trust Common Shares in connection therewith. The Operating Partnership is
responsible for, and pays when due, its share of all administrative and
operating expenses of properties in which it acquires an interest.

     Senior management of the Trust has discretion in day to day management and
control of the affairs of the Trust and the Operating Partnership, subject to
(i) general supervision and review by the Independent Trustees and other members
of the Board of


                                       4
<PAGE>


Trustees of the Trust and (ii) prior approval authority of a majority of the
Board and/or of a majority of the Independent Trustees in respect of certain
actions of the Trust and the Operating Partnership. The Declaration of the Trust
requires that a majority of the Board of Trustees of the Trust be comprised of
Independent Trustees. Two of the three current members of the Board of Trustees
are Independent Trustees.

     Effective April 1, 2002, the executive offices of the Trust and the
Operating Partnership will be moved to 3570 U.S. Highway 98 North, Lakeland,
Florida 33809. The main telephone number at the Lakeland offices is
(863) 853-2882.

Brief Description of Properties

     Through the Operating Partnership, the Trust has invested in indirect
equity or debt interests in residential apartment properties (and in one case, a
condominium apartment property). As of December 31, 2001, the Trust had an
indirect equity interest in 19 residential apartment properties (consisting of
an aggregate of 1,177 existing apartment units and 56 apartment units under
development) and an indirect debt interest in nine residential apartment
properties and one condominium apartment property (consisting of an aggregate of
590 residential apartment units and 152 condominium apartment units under
development). Of such properties, the Operating Partnership acquired indirect
ownership of three apartment properties, a 40% interest in another property, and
small minority equity interests in several other residential apartment
properties with the net proceeds of its Cash Offering (individually an "Acquired
Property" and collectively, the "Acquired Properties") (see "- Acquired
Properties" below), and it acquired the other property interests in connection
with the Exchange Offering described below under "- Exchange Offering."

     Acquired Properties

     The Operating Partnership acquired significant ownership interests in four
Acquired Properties, consisting of an aggregate of 309 existing apartment units
with the net proceeds of the Cash Offering. The Operating Partnership is the
sole beneficial owner of three of the Acquired Properties, which were
constructed during the 1980's and are comprised of one-story garden style
apartment buildings of modular construction.

     The fourth property, in which the Operating Partnership indirectly owns a
40% interest, is still under construction. As of March 31, 2002, 112 units of
that property had been completed and 72 of such units have been rented. An
additional 56 units are planned. As described further below under ITEM 2 -
DESCRIPTION OF PROPERTIES, due to a first mortgage loan default and another
default, recurring losses, a partners' deficiency and a recent appraisal that
valued the property at an amount less than the total liabilities owed,
management of the Trust determined in 2000 to reduce to zero the carrying value
of the property on its records.

     The Acquired Properties are located in urban and suburban and secondary
markets in Florida and Kentucky. During 2001, the average economic occupancy of
the Acquired Properties was approximately 91.3% and the average monthly rent
collected per occupied unit was approximately $469.

     The table below indicates the geographic locations of the Acquired
Properties in which the Operating Partnership had an ownership interest at
December 31, 2001:

                                  No. of
                                 Acquired       Existing
   Sites            States      Properties       Units
   -----            ------      ----------       -----
Florida                3            3             197
Kentucky               1            1             112
                     ---          ---             ---
Total                  4            4             309
                     ===          ===             ===

     Exchange Offering

     In April 2000, pursuant to a registration statement on Form S-4, the
Operating Partnership completed an exchange offering (the "Exchange Offering")
under which it acquired additional interests in residential apartment properties
(and in one case, a condominium apartment property). In the Exchange Offering,
the Operating Partnership issued 2,449,492 registered Operating Partnership
Units in exchange for substantially all outstanding units of limited partnership
interest owned by individual limited partners


                                       5
<PAGE>


("Exchange Limited Partners") in 23 limited partnerships (the "Exchange
Partnerships"), which directly or indirectly owned equity and/or debt interests
in one or more of 25 residential apartment properties and one condominium
apartment property (the "Exchange Properties") located in the southeast and
mid-west United States. Prior to the completion of the Exchange Offering, the
Exchange Partnerships were managed by corporate general partners (the "Corporate
General Partners") which were controlled by Gregory K. McGrath, who is a founder
and former Chief Executive Officer of the Trust and the Operating Partnership
and a principal unitholder of the Operating Partnership.

     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 were owned entirely by 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 were owned by the Operating
Partnership, with the remaining limited partnership interests being retained by
Exchange Limited Partners who elected not to accept the offering or failed to
respond to the offering.

     The 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 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 offered to
the public pursuant to the Cash Offering. The value of each Unit and Common
Share outstanding is substantially identical since Unit holders, including
recipients of Units in the Exchange Offering, are entitled to exchange all or a
portion of their Units at any time and from time to time for an equivalent
number of Common Shares, so long as the exchange would not cause the exchanging
party to own (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 that were
offered by the Trust in the Cash Offering) have been registered under the Act.
As of March 1, 2002, holders of 136,367 Units have elected to exchange their
Units for an equivalent number of Common Shares.

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

     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.


                                       6
<PAGE>

<TABLE>
<CAPTION>

                                                                                                                  Percentage
                                                                                                                       of
                                                        No. of Units        Percentage of      No. of Units       Outstanding
                                                       Accepting the      Outstanding Units    Declining the         Units
Name of Exchange Partnership                         Exchange Offering        Accepting      Exchange Offering     Declining
--------------------------------------------------- --------------------- ------------------ ------------------ ------------
<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 April 2001, the Operating Partnership caused one of the Exchange
Partnerships, Florida Capital Income Fund IV, Ltd., to sell its record title
interest in one of the Exchange Properties, Glen Lakes Apartments, a 144-unit
residential apartment property located in St. Petersburg, Florida. Management of
the Trust determined to sell the property based on its lack of performance and
its need for substantial and frequent cash infusions. (See Note 5 "Sale of
Property" in the accompanying notes to the consolidated condensed financial
statements.)

     Certain of the Exchange Partnerships in which the Operating Partnership
holds an interest directly or indirectly own equity interests in 15 Exchange
Properties which consist of an aggregate of 868 residential apartment units
(comprised of studio, one, two, three and four-bedroom units). Certain of the
Exchange Partnerships in which the Operating Partnership holds an interest
directly or indirectly own subordinated mortgage and other debt interests in 10
Exchange Properties, which consist of an aggregate of 590 existing residential
apartment units (studio and one and two bedroom units) and 152 condominium
apartment units (two and three bedroom units) under development. Of the Exchange
Properties in which the Operating Partnership continues to own an interest, 20
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.

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


                                       7
<PAGE>


removal is readily achievable. The ADA does not, however, consider residential
properties, such as residential apartment properties, to be public
accommodations or commercial facilities, except to the extent portions of such
facilities, such as the leasing office, are open to the public. The Trust
believes that its properties comply with all present requirements under the ADA
and applicable state laws. Noncompliance could result in imposition of fines or
an award of damages to private litigants. If required to make material
additional changes, the Trust's results of operations could be adversely
affected.

Environmental

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

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

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

     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 39
full-time employees.


ITEM 2. DESCRIPTION OF PROPERTIES

 Description of Properties

         Effective April 1, 2002, the Trust and Operating Partnership will move
their executive and administrative offices, financial operations and a portion
of property operations to approximately 2,800 square feet of office space
located at 3570 U.S. Highway 98 North, Lakeland, Florida 33809. The space was
leased in March 2002 from Grove Associates (Indianapolis, Indiana), an unrelated
party, for a term of three years at a monthly rent of $2,800 (subject to common
area maintenance adjustments). The Lakeland office telephone number is (863)
853-2882. The Trust and Operating Partnership will retain their prior office
space located at 7800 Cooper Road, Cincinnati, Ohio 45242 through June 2002, and
maintain a staff member at the office through such date. The Cincinnati office
telephone number is (513) 984-3408.

     Through the Operating Partnership, the Trust has invested in indirect
equity or debt interests in residential apartment properties. As of December 31,
2001, the Trust had an indirect equity interest in 19 residential apartment
properties (consisting of an aggregate of 1,177 existing apartment units and 56
apartment units under development) and an indirect debt interest in nine
residential apartment properties and one condominium apartment property
(consisting of an aggregate of 590 existing residential apartment units and 152
condominium apartment units under development). Of such properties, the
Operating Partnership acquired indirect ownership of three residential apartment
properties, a 40% equity interest in another residential apartment property, and
small minority equity interests in other properties described below under "- The
Acquired Properties") with the net proceeds of the Trust's Cash Offering, and it
acquired the other property interests in connection with its Exchange Offering
described below under "- Exchange Offering."


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<PAGE>


The Acquired Properties

     Set forth below is a description of the Operating Partnership's acquisition
between June 1998 and June 1999 of beneficial ownership of 67-unit, 80-unit and
50-unit residential apartment properties located in Orlando, Lakeland and New
Smyrna Beach, Florida, respectively; a 40% limited partnership interest in a
168-unit residential apartment property under development in Alexandria,
Kentucky, of which 112 are completed and 72 are rented; and a minority limited
partnership interest in 13 real estate partnerships (less than 4% in each case)
which own direct or indirect equity or debt interests in residential apartment
properties, including 10 of the Exchange Partnerships that participated in the
Exchange Offering and are now controlled and managed by the Operating
Partnership. The 13 limited partnerships were formerly affiliated with Gregory
K. McGrath, a founder and former Chief Executive Officer of the Trust and the
Operating Partnership and a principal unitholder of the Operating Partnership.
In September 2001, the remaining limited partnership interests and the entire
general partnership interest in the three limited partnerships that are not
Exchange Partnerships were assigned to Sigma Renaissance Corporation, which is
controlled by Jerome S. Rydell, a member of the Board of Trustees of the Trust.

     By acquiring general and limited partnership interests in entities that own
record title rather than direct record title when acquiring property interests,
the Operating Partnership avoids certain costs, such as first mortgage
assumption fees and recordation of title costs. The Operating Partnership's
investments in the Acquired Properties were made using net proceeds of the
Trust's Cash Offering. Also described below is a purchase agreement entered into
by the Trust under which the Trust, subject to certain conditions, received an
option to acquire two residential apartment properties (totaling 652 units)
under development in Burlington and Louisville, Kentucky upon completion of
construction. One of the properties has been sold by its owner, with the consent
of the Trust.

     Heatherwood Apartments

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

     The Heatherwood Property, completed in 1981, consists of 17 studio/one
bathroom units, 45 one bedroom/one bathroom units, and five two bedroom/one
bathroom units. The property is situated on approximately 2.26 acres and has
approximately 35,136 square feet of rentable area. The average unit size of the
studio, one bedroom and two bedroom units is approximately 288, 576 and 864
square feet, respectively. The average monthly rental rate as of December 31,
2001 for each type of unit was approximately $427, $542 and $678, respectively,
or $1.49, $.94 and $.79 per square foot, respectively. The average monthly
occupancy rates for 1997, 1998, 1999, 2000 and 2001 were approximately 97%, 94%,
96%, 98%, and 94%, respectively. The average annual rental rate per unit for
each of the last five years has been $5,820 (1997), $6,060 (1998), $5,555
(1999), $6,377 (2000), and $6,250 (2001).

     The Operating Partnership acquired the entire limited partnership interest
in the Heatherwood Partnership from an unaffiliated third party, Rylex Capital,
L.L.C., a Florida limited liability company, for a purchase price of $830,000.
The purchase price was based on an independent appraisal of the market value of
the property plus the value of any additional assets, less all liabilities, and
was approved by the Board of the Trust. The Heatherwood Property is subject to
first mortgage financing with a principal balance as of December 31, 2001 of
approximately $1,887,000. The mortgage is held by GMAC Commercial Mortgage Corp.
The first mortgage loan matures in February 2011. Assuming no prepayments of
principal, the balance that will be due at maturity is approximately $1,083,553.
The monthly debt service payments are $13,298, or an annual amount of $159,576.
The loan bears a fixed interest rate of 7.51% and amortizes on a 30-year basis.
The loan is prepayable after the third year of the note's term or the second
year following securitization, subject to defeasance provisions.

     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.


                                       9
<PAGE>


     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, with the
exception of any home businesses being conducted from units. The property leases
units for periods of no longer than one year. The federal tax depreciation basis
as of June 30, 2001 is $1,458,344. 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 2001 taxes due March 31, 2002 were $27,601. 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 December 31,
2001 for each type of unit is approximately $362, $399 and $543, respectively,
or $1.26, $.70 and $.63 per square foot, respectively. The average monthly
occupancy rates for 1997, 1998, 1999, 2000 and 2001 were approximately 95%, 91%,
95%, 95%, and 95%, respectively. The average annual rental rate per unit for the
Crystal Court Property for each of the last five years has been $4,632 (1997),
$4,812 (1998), $4,433 (1999), $4,686 (2000), and $4,750 (2001).

     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 principal balance
as of December 31, 2001 of approximately $1,430,662. The mortgage is held by
GMAC Commercial Mortgage Corp. The first mortgage loan matures in October 2004.
Assuming no prepayments of principal, the balance that will be due at maturity
is approximately $1,366,490. The monthly debt service payments are $10,446, or
an annual amount of $125,355. The loan bears a fixed interest rate of 7.5% and
amortizes on a 30-year basis. The loan is prepayable with a prepayment fee equal
to 1% of the then outstanding principal balance.

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

     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, with the
exception of any home businesses being conducted from units. The property leases
units for periods of no longer than one year. The federal tax depreciation basis
as of June 30, 2001 is $1,496,450. 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 2001 taxes due March 31, 2002 were $25,633. 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. The Trust is


                                       10
<PAGE>


the manager of Riverwalk, LC. The Operating Partnership owns 99% of the
membership interests in Riverwalk, LC. The remaining 1% membership interest is
held by the Trust.

     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 year
1997 for the Riverwalk Property is unavailable. The occupancy rates in 1998,
1999, 2000 and 2001 were 98%, 96%, 99% and 92%, respectively. As of December 31,
2001, the property was 88% occupied. The average monthly rental rate as of
December 31, 2001 was approximately $566 for a one bath unit and $612 for a two
bath unit. The property has 51,024 square feet of rentable space, or
approximately 1,020 square feet on average per unit. The current rent per square
foot is approximately $.59. The average annual rental rates for 1999, 2000 and
2001 were approximately $7,123, $7,272 and $7,241 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 $655,000. 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 principal balance of the mortgage as of December 31, 2001
was approximately $1,522,164. The mortgage matures in November 2004 and has a
current interest rate of 8.77%. Assuming no prepayments of principal, the
balance that will be due at maturity is approximately $1,411,716. The monthly
debt service payments are $14,072, or an annual amount of $168,860. Prepayment
is permitted at any time, subject however to a yield maintenance termination fee
calculated in accordance with the terms of the loan.

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

     The Riverwalk Property is a residential community; there is no tenant who
occupies 10% or more of the rentable square footage. There is no business,
occupation or profession taking place on the Riverwalk Property, with the
exception of any home businesses being conducted from units. The property leases
units for periods of no longer than one year. The federal tax depreciation basis
as of June 30, 2001 is $1,459,408. Depreciation is taken on a straight-line
basis over 30 years. The Riverwalk Property is taxed at 24.95 mills per $1,000
valuation and the 2001 taxes due March 31, 2002 were $35,709. Estimated taxes on
proposed improvements are not material.

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


                                       11
<PAGE>

     Alexandria Property

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

     An affiliate of Mr. McGrath sold the 40% limited partnership interest in
the Alexandria Partnership to the Operating Partnership, and a separate
affiliate of Mr. McGrath formerly served as the managing general partner of the
Alexandria Partnership. In September 2001, Mr. McGrath's affiliate assigned the
remaining 60% limited partnership interest in the Alexandria Partnership to
Sigma Renaissance Corporation (which is controlled by Jerome S. Rydell, a member
of the Board of Trustees of the Trust), and Sigma Renaissance Corporation became
the managing general partner of the Alexandria Partnership. During the
construction stage of the apartment property, the Operating Partnership's
limited partnership interest in the Alexandria Partnership is entitled to an
annual 12% preferential return which is senior to the other limited partnership
interests and the general partner's nominal 1% interest.

     As of December 31, 2001, 112 of the 168 planned residential units
(approximately 67%) had been completed and were in the rent-up stage. Of the
completed units, 72 units have been rented as of November 30, 2001 at an average
annual rental rate of $697. The average monthly occupancy rates for 1998, 1999,
2000 and 2001 were 14%, 26%, 61%, and 55%, respectively, based on all 168 units
scheduled to be developed.

     In early May 2001, MarCap Corporation filed an action in the United States
District Court for the Northern District of Illinois against WaKul, Inc. (a
telecommunications company controlled by Gregory K. McGrath, the former Chief
Executive Officer of the Trust), Mr. McGrath, and the Alexandria Partnership,
among other parties, seeking repayment of approximately $407,000 of indebtedness
(plus unspecified interest, attorney's fees and collection costs) under a
telecommunication equipment leasing agreement. Certain of the equipment was
installed at the Alexandria Property. The Alexandria Partnership guaranteed
WaKul, Inc.'s lease payments under the leasing agreement.

     The Alexandria Property is subject to first mortgage construction financing
with a principal balance as of December 31, 2001 of approximately $8,525,000.
The first mortgage is held by Fifth Third Bank. The construction loan has a
current interest rate of 9.0%. The monthly debt service payments are
approximately $65,000, or an annual amount of $780,000. Prepayment is permitted
at any time, subject however to a yield maintenance termination fee calculated
in accordance with the terms of the loan. Upon completion of construction, the
construction loan is expected to be refinanced by long-term first mortgage
financing.

         The Alexandria Partnership defaulted on the first mortgage construction
loan when it matured in December 2000, and the lender has exercised its right to
accelerate payment of the loan. In December 2001, a Kentucky court appointed a
receiver to manage the property. The construction contractor is owed
approximately $890,000 for construction costs, penalties and interest. Sigma
Renaissance Corporation, acting as the managing general partner of the
Alexandria Partnership, recently caused the partnership to file for bankruptcy
protection, and is currently negotiating with Fifth Third Bank and the
construction contractor to address the defaults.

     In 2000, the Operating Partnership reduced to zero on its records the value
of its investment in the Alexandria Partnership due to the defaults on
indebtedness, recurring losses incurred by the Alexandria Property, a partners'
deficiency, and an updated appraisal that valued the property at an amount less
than the total liabilities owed.

     The Alexandria Property is a new development, and there is no renovation
program in place. The property has 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, with the exception of any home businesses being conducted
from units. 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.


                                       12
<PAGE>


     Acquisition of Limited Partnership Interests

     In July 1998, the Operating Partnership also was admitted as a minority
limited partner in 13 real estate limited partnerships, including 10 of the
Exchange Partnerships that participated in the Exchange Offering and are now
controlled and managed by the Operating Partnership. The 13 limited partnerships
were formerly affiliated with Gregory K. McGrath, a founder and former Chief
Executive Officer of the Trust and the Operating Partnership and a principal
unitholder of the Operating Partnership. In September 2001, the remaining
limited partnership interests and the entire general partnership interest in the
three limited partnerships that are not Exchange Partnerships were assigned to
Sigma Renaissance Corporation, which is controlled by Jerome S. Rydell, a member
of the Board of Trustees of the Trust.

     The Operating Partnership acquired the interests in consideration of a
capital contribution ranging from approximately $2,900 to $83,300 in each such
partnership. The aggregate contribution made by the Operating Partnership was
approximately $341,000. The percentage interest acquired by the Operating
Partnership (less than 4% in each case) was calculated at fair market value. In
each instance, the Operating Partnership agreed that its right to receive
distributions from cash flow or from a capital event would be subordinate to the
right of the existing limited partners to receive any preferred return described
in the partnership agreement of the respective partnership. In addition, the
Operating Partnership agreed with the Exchange Partnerships that the acquisition
would not affect the valuation of the limited partnership interests for purposes
of the Exchange Offering. These various partnerships have been accounted for on
the cost method since their respective ownership interests represent less than
20% of the equity ownership therein. In addition, the partnerships will
periodically assess the realizable value of these investments in order to
ascertain whether there has been any impairment in their recorded value.

     Contract to Acquire Two Additional Properties

     The following description of the Trust's involvement in the Burgundy Hills
Property represents an update of information previously disclosed in periodic
reports (Form 10-QSB quarterly reports and Form 10-KSB annual reports) of the
Trust and the Operating Partnership previously filed with the Securities and
Exchange Commission.

     In September 1998, the Trust entered into an agreement with three real
estate development companies (Brentwood at Southgate, Ltd., Burlington
Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire, at the
Trust's option, two luxury residential apartment properties in the development
stage upon the completion of construction. The three development companies were
previously controlled by Gregory K. McGrath, a founder and former Chief
Executive Officer of the Trust and the Operating Partnership and a principal
holder of Operating Partnership Units. In September 2001, Mr. McGrath assigned
all of the outstanding partnership interests in the three partnerships to Sigma
Renaissance Corporation, a Michigan corporation controlled by Jerome S. Rydell,
a member of the Board of Trustees of the Trust. One of the residential apartment
properties has been sold to a third party with the Trust's consent. The
remaining residential property (the "Burgundy Hills Property"), located in
Florence, Kentucky (part of the Cincinnati metropolitan area), is scheduled to
have a total of 396 units, comprised of one, two and three bedroom/one or two
bathroom apartments. Due to events described below, the anticipated date of
completion of construction of the Burgundy Hills Property is uncertain.

     In connection with the transaction, the Trust obtained a right of first
negotiation to purchase the Burgundy Hills Property from its owner, Burlington
Residential, Ltd., upon completion and a right of first refusal to purchase the
property on the same terms offered by a third party. The purchase price is
expected to be approximately $30,000,000. It is contemplated that a significant
portion of that amount would be covered by first mortgage financing. At the
current time the Trust does not have adequate resources to close on the
transaction even if it were interested in doing so and if construction were
completed and it is uncertain whether the Trust will have adequate resources to
complete the transaction upon completion of construction. In addition, as
described below, because the owner of the first mortgage on the property has
assumed control of the management of the Borrower and the development of the
property, the exercisability of the Trust's purchase rights is currently
uncertain.

     In connection with the transaction, the Trust (along with Mr. McGrath)
agreed to co-guarantee long-term first mortgage construction financing provided
by KeyBank National Association ("KeyBank") to Burlington Residential, Ltd.
("Borrower"), the owner of the Burgundy Hills Property. As of December 31, 2001,
approximately $6,478,000 of the first mortgage loan had been drawn down. The
interest rate on the first mortgage loan is KeyBank's prime rate (currently
4.75%) or the LIBOR rate plus 2%. The Trust also agreed that, if the Borrower
failed to comply with the repayment and other obligations under the loan
documents, KeyBank could require the Trust to buy out the bank's position on the
entire amount of the construction loan.


                                       13
<PAGE>


     In September 2000, the Trust received notice from counsel to KeyBank that
the Borrower had defaulted on its loan for failure to pay current interest due
and meet certain equity requirements and covenants under the loan agreement,
adverse changes in the financial conditions of the Borrower and the Trust, and
the Trust's failure to meet certain tangible net worth tests set forth in the
loan agreements. KeyBank indicated that it was exercising its right to
accelerate the loan. According to Mr. McGrath, KeyBank agreed to forego further
action for at least 60 days while the parties attempted to reach an arrangement.
The extension expired in November 2000 and, according to Mr. McGrath, is
currently being extended on a month-to-month basis. The Borrower paid down the
outstanding accrued interest and a portion of the principal and intends to seek
a new long-term construction facility with another institutional lender to
replace the first mortgage loan (and the other subordinated financing described
below). There can be no assurance that such financing will be available on
satisfactory terms.

     In December 2000, an affiliate of BankOne acquired KeyBank's position in
the Burgundy Hills first mortgage loan. The loan is subject to the same terms
and conditions as that of the original KeyBank loan. Earlier, the BankOne
affiliate had provided additional institutional financing in the principal
amount of $1,576,000 to the Borrower. That loan is secured by a security
interest in partnership interests in the Borrower. Due to a default in payment
of interest due, the BankOne affiliate has been assigned rental payments from
the Burgundy Hills Property and taken over day-to-day management of the
property. It is intended that this loan would be paid off with the proposed new
first mortgage financing referenced above.

     The BankOne affiliate recently sold the two loans to Burgundy-Boone, LLC,
an Illinois limited liability company, according to the latter's counsel. As a
result, Burgundy-Boone, LLC has assumed control of management of the Borrower
and of the development of the Burgundy Hills Property.

     The Trust, as guarantor of the first mortgage loan, currently has a
contingent liability for its full outstanding amount. According to counsel for
Burgundy-Boone, LLC, as of November 2001, principal and interest payments on the
first mortgage loan are current. However, there can be no assurance that the
first mortgage loan will not again go into default, in which event
Burgundy-Boone, LLC might attempt to begin foreclosure proceedings against the
Burgundy Hills Property in respect of the first mortgage loan.

     Century Construction Inc., the general contractor which performed
construction services on the Burgundy Hills Property, recently filed an action
against the Borrower and Mr. McGrath to enforce a mechanic's lien on the
property in the amount of approximately $1,300,000. The contractor also named
KeyBank and the BankOne affiliate in the action, seeking damages against them on
allegations of lender's liability.

The Exchange Properties

     In the Exchange Offering, the Operating Partnership issued its registered
units of limited partnership interest ("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 owned equity and/or subordinated mortgage or other debt
interests in 25 residential apartment properties and one condominium apartment
property (collectively referred herein as the "Exchange Properties" and
individually an "Exchange Property"). In April 2001, the Operating Partnership
sold its equity interest in one of the properties, Glen Lakes Apartments, a
144-unit residential apartment property located in St. Petersburg, Florida.
Management of the Trust determined to sell the property based on its lack of
performance and its need for substantial and frequent cash infusions. (See Note
5 "Sale of Property" in the accompanying notes to the consolidated condensed
financial statements.)

     The actual limited partnership interest percentage currently owned by the
Operating Partnership in each of the 22 Exchange Partnerships in which it
currently owns an interest is set forth in the table above under ITEM 1.
DESCRIPTION OF PROPERTIES - Brief Description of Properties - Exchange Offering.

     Certain of the Exchange Partnerships in which the Operating Partnership
holds an interest directly or indirectly own equity interests in 15 Exchange
Properties which consist of an aggregate of 868 residential apartment units
(comprised of studio, one, two, three and four-bedroom units). Certain of the
Exchange Partnerships in which the Operating Partnership holds an interest
directly or indirectly own subordinated mortgage and other debt interests in 10
Exchange Properties, which consist of an aggregate of 590 existing residential
apartment units (studio and one and two bedroom units) and 152 condominium
apartment units (two and three bedroom units) under development. Of the Exchange
Properties in which the Operating Partnership continues to own an interest, 20
properties are located in Florida, three properties in Ohio and one property
each in Georgia and Indiana.


                                       14
<PAGE>


     The sole asset of each of 12 Exchange Partnerships in which the Operating
Partnership holds an interest (individually, an "Exchange Equity Partnership"
and collectively, the "Exchange Equity Partnerships") is record title to a
residential apartment property or the entire limited partnership or other equity
interest in a limited partnership or other entity which owns record title to a
property. The sole asset of each of six Exchange Partnerships (individually, an
"Exchange Mortgage Partnership" and collectively, the "Exchange Mortgage
Partnerships") are the entire or an undivided subordinated mortgage interest
(and in one case, unsecured debt interests) in one or more residential apartment
properties (and in one case, a condominium apartment property). 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 22 Exchange Properties and mortgage
indebtedness secured thereby is summarized in the tables set forth below.


                                       15
<PAGE>

                              Property Information
                            Equity Property Interests

The table set forth below summarizes certain information relating to each of the
15 properties in which Exchange Equity Partnerships and Exchange Hybrid
Partnerships involved in the Exchange Offering directly or indirectly own an
equity interest, including (i) the name of the respective partnership, (ii) the
name and location of each property, (iii) the year each property was completed,
(iv) the number of units, acreage, rentable area, average unit size and average
rental rate per unit and per square feet of rentable area as of December 31,
2001, and (v) physical occupancy of each property as of December 31, 2001.

<TABLE>
<CAPTION>

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

Exchange Equity
Partnerships:
-------------

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

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

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

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

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

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

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

Florida Income         Blossom Corners   Orlando,           1980       Total          70    3.67        39,300
Growth Fund V, Ltd.    Apartments        Florida                       Studio         15
                      (Phase I) (1)                                   1 BR          49
                                                                        2 BR           6

<CAPTION>

                                                   12/31/2001             Physical
                                                 Average Rental           Occupancy
                           Avg. Unit Size          Rates/Month              as of
Partnership                   (Sq. Ft.)      (Per Unit) (Per Sq. Ft.)     12/31/2001
-----------                   ---------      ------------------------     ----------

Exchange Equity
Partnerships:
-------------

<S>                        <C>         <C>       <C>         <C>             <C>
Baron Strategic            Avg.        657       $408        $.56            88.9%
Investment Fund II,        1 BR        550
Ltd.                       2 BR        678

Central Florida            Avg.        807       $548        $.65            94.6%
Income Appreciation        1 BR        576
Fund, Ltd.                 2 BR        864

Florida Capital            Avg.        591       $487        $.81            97.4%
Income Fund, Ltd.          1 BR        576
                           2 BR        864

Florida Capital            Avg.      1,205       $690        $.54            94.2%
Income Fund II, Ltd.       2 BR      1,075
                           3 BR      1,358

Florida Capital            Avg.        570       $480        $.81            95.8%
Income Fund III, Ltd.     Studio       288
                           1 BR        576
                           2 BR        864

Florida Income             Avg.      1,151       $675        $.50            84.6%
Advantage Fund I,          2 BR      1,075
Ltd.                       3 BR      1,358

Florida Income             Avg.      1,146       $679        $.60            100.0%
Appreciation Fund I,       2 BR      1,075
Ltd.                       3 BR      1,358

Florida Income             Avg.        561       $508        $.82            90.0%
Growth Fund V, Ltd.       Studio       300
                           1 BR        600
                           2 BR        900
</TABLE>


                                       16
<PAGE>

<TABLE>
<CAPTION>

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

Exchange Equity
Partnerships:
-------------

<S>                    <C>               <C>                <C>        <C>            <C>   <C>         <C>
Florida Opportunity    Camellia Court    Daytona            1982       Total          60    5.15        34,848
Income Partners, Ltd.  Apartments (1)    Beach,                         1 BR          59
                                         Florida                        2 BR           1

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

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

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

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

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

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

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

Lamplight Court of     Lamplight         Bellefontaine,     1973       Total          80    6.00        46,944
Bellefontaine          Apartments (7)    Ohio                          Studio         12
Apartments, Ltd.                                                        1BR           53
                                                                        2 BR          15
                                                                                --------  -------    ----------
                       TOTAL
                       PROPERTIES**:                                                868    55.45       601,656
----------------------                                                          ========  =======    ==========

<CAPTION>

                                                   12/31/2001              Physical
                                                 Average Rental           Occupancy
                            Avg. Unit Size         Rates/Month               as of
Partnership                   (Sq. Ft.)      (Per Unit) (Per Sq. Ft.)     12/31/2001
-----------                   ---------      ------------------------     ----------

Exchange Equity
Partnerships:
-------------

<S>                        <C>         <C>       <C>         <C>             <C>
Florida Opportunity        Avg.        581       $457        $.78            98.3%
Income Partners, Ltd.      1 BR        576
                           2 BR        864

GSU Stadium Student        Avg.        860       $200        $.52            57.4%
Apartments, Ltd.          Studio       288
                           3 BR        880
                           4 BR        880

Midwest Income             Avg.        576       $372        $.64            98.5%
Growth Fund VI, Ltd.      Studio       288
                           1 BR        576
                           2 BR        864

Realty Opportunity         Avg.      1,141       $679        $.55            93.3%
Income Fund VIII,          2 BR      1,075
Ltd.                       3 BR      1,358

Exchange Hybrid
Partnerships:
Baron Strategic            Avg.        513       $516        $.91            90.1%
Investment Fund VI,       Studio       288
Ltd.                       1 BR        576
                           2 BR        864

Baron Strategic            Avg.        608       $416        $.68            98.6%
Investment Fund IX,        1 BR        576
Ltd.                       2 BR        864

Baron Strategic            Avg.        608       $416        $.68            98.6%
Investment Fund X,         1 BR        576
Ltd.                       2 BR        864

                           Avg.        513       $516        $.91            90.1%
                          Studio       288
                           1 BR        576
                           2 BR        864

Lamplight Court of         Avg.        587       $390        $.63            95.0%
Bellefontaine             Studio       288
Apartments, Ltd.           1 BR        576
                           2 BR        864
                                   -------     ------     -------        --------

                                       673       $469        $.69            91.3%
----------------------             =======     ======     =======        ========
</TABLE>

*    Includes only residential apartment units and excludes common areas.

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


                                       17
<PAGE>

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

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

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

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

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

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

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


                                       18
<PAGE>


                              Property Information
                             Debt Property Interests

The table set forth below summarizes certain information relating to each of the
10 properties in which Exchange Mortgage Partnerships and Exchange Hybrid
Partnerships involved in the Exchange Offering own a mortgage interest,
including (i) the name of the respective partnership, (ii) the name and location
of each property, (iii) the year each property was completed, (iv) the number of
units, acreage, rentable area, average unit size and average rental rate per
unit and per square feet of rentable area as of December 31, 2001, and (v)
physical occupancy of each property as of December 31, 2001.

<TABLE>
<CAPTION>

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

Exchange Mortgage
Partnerships:
------------

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

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

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

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

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

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

<CAPTION>

                                               12/31/2001             Physical
                                             Average Rental           Occupancy
                       Avg. Unit Size          Rates/Month              as of
Partnership              (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)    12/31/2001
-----------              ---------       ------------------------    ----------

Exchange Mortgage
Partnerships:
------------

<S>                   <C>         <C>       <C>         <C>             <C>
Baron Strategic        Avg.        557      $520        $.78            85.1%
Investment Fund,      Studio       300
Ltd.                   1 BR        600
                       2 BR        864

                       Avg.      1,325      N/A          N/A             N/A
                       2 BR
                       3 BR

Baron Strategic        Avg.        548      $482        $.84            95.9%
Investment Fund IV,   Studio       288
Ltd.                   1 BR        576
                       2 BR        864

Baron Strategic        Avg.        532      $457        $.52            60.6%
Investment Fund V,    Studio       288
Ltd.                   1 BR        576
                       2 BR        864

                       Avg.        540      $464        $.82            95.1%
                      Studio       288
                       1 BR        576
                       2 BR        864

Baron Strategic        Avg.        541      $528        $.93            92.9%
Investment Fund       Studio       288
VIII, Ltd.            1 BR/1B      576
                      2 BR/1B      864
                      2 BR/2B      864
</TABLE>


                                       19
<PAGE>

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

<S>                   <C>                 <C>                <C>        <C>          <C>   <C>        <C>
Baron Strategic       Longwood            Cocoa, Florida     1981       Total        59    4.00       36,288
Investment Fund       Apartments                                         1 BR        51
VIII, Ltd. (cont'd)   (Phase I) (1)                                      2 BR         8

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

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

Exchange Hybrid
Partnerships
------------

Baron Strategic       Candlewood          Tampa, Florida     1988       Total        33    2.75       17,568
Investment Fund VI,   Apartments                                        Studio        6
Ltd.                  (Phase II) (3)                                     1 BR        26
                                                                         2 BR         1
                      Country Square                         1981       Total        73    4.56       40,032
                      Apartments          Tampa, Florida                Studio       14
                      (Phase I) (3)                                      1 BR        52
                                                                         2 BR         7

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

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

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

<CAPTION>

                                              12/31/2001             Physical
                                            Average Rental           Occupancy
                      Avg. Unit Size          Rates/Month              as of
Partnership             (Sq. Ft.)       (Per Unit) (Per Sq. Ft.)    12/31/2001
-----------             ---------       ------------------------    ----------

<S>                    <C>         <C>      <C>         <C>             <C>
Baron Strategic        Avg.        615      $453        $.72            96.7%
Investment Fund        1 BR        576
VIII, Ltd. (cont'd)    2 BR        864

                       Avg.      1,325      N/A          N/A             N/A
                       2 BR
                       3 BR

Baron Strategic        Avg.        540      $464        $.82            95.1%
Vulture Fund I, Ltd.  Studio       288
                       1 BR        576
                       2 BR        864
Brevard Mortgage       Avg.        612      $396        $.65           100.0%
Program, Ltd.          1 BR        576
                       2 BR        864

Exchange Hybrid
Partnerships
------------

Baron Strategic        Avg.        532      $457        $.52            60.6%
Investment Fund VI,   Studio       288
Ltd.                   1 BR        576
                       2 BR        864
                       Avg.        548      $482        $.84            95.9%
                      Studio       288
                       1 BR        576
                       2 BR        864

                       Avg.        601      $407        $.68            86.7%
                      Studio       288
                       1 BR        576
                       2 BR        864

Baron Strategic        Avg.        532      $457        $.52            60.6%
Investment Fund IX,   Studio       288
Ltd.                   1 BR        576
                       2 BR        864

                       Avg.        601      $407        $.68            86.7%
                      Studio       288
                       1 BR        576
                       2 BR        864


</TABLE>


                                       20
<PAGE>

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

<S>                   <C>                 <C>              <C>         <C>          <C>    <C>       <C>
Baron Strategic       Villas at Lake      Cincinnati,      Est. 4th     Total       164    20.2      217,300
Investment Fund IX,   Sycamore            Ohio              quarter
Ltd. (cont'd)         (condominiums) (3)                     2003

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

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

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

                                                                                 ------  -------    --------
                      TOTAL
                      PROPERTIES**(5):                                              590    38.40     338,772
---------------------                                                            ======  =======    ========

<CAPTION>

                                                 12/31/2001             Physical
                                               Average Rental          Occupancy
                         Avg. Unit Size          Rates/Month             as of
Partnership                 (Sq. Ft.)      (Per Unit) (Per Sq. Ft.)    12/31/2001
-----------                 ---------       ------------------------   ----------

<S>                     <C>         <C>       <C>         <C>             <C>
Baron Strategic          Avg.      1,325      N/A          N/A             N/A
Investment Fund IX,
Ltd. (cont'd)

Baron Strategic          Avg.        601      $407        $.68            86.7%
Investment Fund X,      Studio       288
Ltd.                     1 BR        576
                         2 BR        864

                         Avg.        541      $528        $.93            92.9%
                        Studio       288
                         1 BR        576
                        2 BR/1B      864
                        2 BR/2B      864

Lamplight Court of       Avg.        587      $390        $.63            95.0%
Bellefontaine           Studio       288
Apartments, Ltd.         1 BR        576
                         2 BR        864

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

                                     569      $449        $.73            91.3%
---------------------             ======  ========      ======       =========
</TABLE>

*    Includes only apartment units and excludes common areas.

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

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.


                                       21
<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 15 properties in which Exchange Equity Partnerships and Exchange Hybrid
Partnerships involved in the Exchange Offering directly or indirectly own an
equity interest, including (i) name of partnership, (ii) name and location of
the properties, (iii) principal balances as of December 31, 2001, (iv) interest
rates, (v) annual and monthly debt service, (vi) amortization term, (vii)
maturity dates, (viii) balances due on maturity, and (ix) name of lending
institution.

<TABLE>
<CAPTION>
                                                   12/31/2001                     Annual
                                                    Principal       Interest       Debt
Partnership        Property        Location          Balance          Rate       Payment
-----------        --------        --------          -------          ----       -------

Exchange
Equity
Partnerships:
------------

<S>                <C>             <C>               <C>            <C>            <C>
Baron Strategic    Steeplechase    Anderson,         $1,466,379     to 10/1/02     $115,872
Investment Fund    Apartments      Indiana                               6.5%;
II, Ltd.                                                              on/after
                                                                       10/1/02
                                                                          7.5%

Central Florida    Laurel Oaks     Deland,           $1,543,086          6.54%     $121,863
Income             Apartments      Florida
Appreciation
Fund, Ltd.

Florida Capital    Eagle Lake      Port Orange,      $1,878,945          7.51%     $168,636
Income Fund, Ltd.  Apartments      Florida

Florida Capital    Forest Glen     Daytona           $1,719,744          7.01%     $125,696
Income Fund II,    Apartments      Beach,
Ltd.               (Phase I)       Florida

Florida Capital    Bridge Point    Jacksonville,       $864,087          9.52%      $77,183
Income Fund III,   Apartments      Florida
Ltd.               (Phase II)

Florida Income     Forest Glen     Daytona             $859,874          7.01%      $71,649
Advantage          III             Beach, FL
Fund I, Ltd.

Florida Income     Forest Glen     Daytona             $264,567          7.01%      $19,337
Appreciation       Apartments      Beach,
Fund I, Ltd.       (Phase IV)      Florida

Florida Income     Blossom         Orlando,            $978,296          9.04%     $106,084
Growth Fund V,     Corners         Florida
Ltd.               Apartments
                   (Phase I)

<CAPTION>

                                                               Balance
                     Monthly     Amortization     Maturity      Due on
Partnership          Payment         Term           Date       Maturity      Lender
-----------          -------         ----           ----       --------      ------

Exchange
Equity
Partnerships:
------------

<S>                   <C>           <C>             <C>        <C>           <C>
Baron Strategic        $9,656       30 years        10/06      $1,349,275    Crown Bank
Investment Fund
II, Ltd.



Central Florida       $10,155       30 years        12/28          $0        Prudential Mortgage
Income                                                                       Capital
Appreciation
Fund, Ltd.

Florida Capital       $14,053       25 years        02/11      $1,515,037    GMAC
Income Fund, Ltd.

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

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

Florida Income         $5,971       30 years         3/05        $817,310    Prudential Mortgage
Advantage                                                                    Capital
Fund I, Ltd.

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

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


                                       22
<PAGE>

<TABLE>
<CAPTION>
                                                    12/31/2001                     Annual
                                                     Principal         Interest     Debt
Partnership        Property        Location           Balance            Rate      Payment
-----------        --------        --------           -------            ----      -------

Exchange
Equity
Partnerships:
------------

<S>                <C>             <C>               <C>                 <C>       <C>
Florida            Camellia        Daytona           $1,024,882          9.04%     $111,132
Opportunity        Court           Beach,
Income Partners,   Apartments      Florida
Ltd.

GSU Stadium        Stadium Club    Statesboro,       $1,641,887          7.87%     $160,346
Student            Apartments      Georgia
Apartments, Ltd.

Midwest Income     Brookwood Way   Mansfield,        $1,003,084          9.04%     $108,612
Growth Fund VI,    Apartments      Ohio
Ltd.

Realty             Forest Glen     Daytona             $992,145          7.01%      $72,517
Opportunity        Apartments      Beach,
Income Fund        (Phase II)      Florida
VIII, Ltd.

Exchange Hybrid
Partnerships:

Baron Strategic    Pineview        Orlando,          $2,668,392          7.51%     $232,440
Investment Fund    Apartments      Florida
VI, Ltd.

Baron Strategic    Crystal Court   Lakeland,         $1,590,638          7.26%     $130,698
Investment Fund    Apartments      Florida
IX, Ltd.           (Phase I)

Baron Strategic    Crystal Court   Lakeland,         $1,590,638          7.26%     $130,698
Investment Fund    Apartments      Florida
X, Ltd.            (Phase I)

                   Pineview        Orlando,          $2,668,392          7.51%     $232,440
                   Apartments      Florida

<CAPTION>

                                                             Balance
                  Monthly     Amortization     Maturity       Due on
Partnership       Payment         Term           Date        Maturity     Lender
-----------       -------         ----           ----        --------     ------

Exchange
Equity
Partnerships:
------------

<S>                <C>           <C>             <C>         <C>          <C>
Florida            $9,261        30 years        11/06       $913,346     Column Financial, Inc.
Opportunity
Income Partners,
Ltd.

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

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

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

Exchange Hybrid
Partnerships:

Baron Strategic    $19,370       30 years        02/11      $2,152,948    GMAC
Investment Fund
VI, Ltd.

Baron Strategic    $10,891       30 years        07/11      $1,248,304    GMAC
Investment Fund
IX, Ltd.

Baron Strategic    $10,891       30 years        07/11      $1,248,304    GMAC
Investment Fund
X, Ltd.

                   $19,370       30 years        02/11      $2,152,948    GMAC
</TABLE>


                                       23
<PAGE>

<TABLE>
<CAPTION>
                                                    12/31/2001                 Annual
                                                     Principal     Interest     Debt
Partnership        Property        Location           Balance        Rate      Payment
-----------        --------        --------           -------        ----      -------

Exchange
Equity
Partnerships:
------------

<S>                <C>             <C>               <C>             <C>     <C>
Lamplight Court    Lamplight       Bellefontaine     $1,304,396      9.04%      $135,660
of Bellefontaine   Court           Ohio
Apts., Ltd.

                                                  -------------              -----------
                   TOTAL
                   PROPERTIES:                      $19,800,402              $ 1,757,725

                                                  =============              ===========

<CAPTION>

                                                             Balance
                  Monthly     Amortization     Maturity       Due on
Partnership       Payment         Term           Date        Maturity         Lender
-----------       -------         ----           ----        --------         ------

Exchange
Equity
Partnerships:
------------

<S>                <C>           <C>             <C>        <C>               <C>
Lamplight Court    $11,305       25 years        11/06       $1,158,349       Column Financial
of Bellefontaine
Apts., Ltd.

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

                   $146,475                                 $15,909,067

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


                                       24
<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 (and in one case, condominium
apartment property) securing the first and second mortgages, (iii) the name of
the debtor, (iv) the original principal amount of the second mortgage loan(s)
held by the Exchange Partnership and the principal balance as of December 31,
2001 and due at maturity, (v) the undivided interests of other Exchange
Partnerships in the second mortgage loans or the principal balance as of
December 31, 2001 of other second mortgage loans secured by the property and
owned by other Exchange Partnerships, (vi) the second mortgage loan interest
rate, maturity date, annual and monthly interest payable and participation
features, if any, and (vii) the principal balance of the institutional first
mortgage loan secured by the property as of December 31, 2001 and the terms
thereof.

     Additional information relating to the underlying residential apartment
property (and in one case, condominium 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 that own fee
simple title to the property which secures such mortgage loans. Sigma
Renaissance Corporation, a Michigan corporation controlled by Jerome S. Rydell,
a member of the Board of Trustees of the Trust, controls the corporate general
partners (and in some cases the limited partnership interests) of the debtor
partnerships. Affiliates of Mr. McGrath, a founder and former Chief Executive
Officer of the Trust and the Operating Partnership, originally controlled the
corporate general partners (and in certain cases the limited partnership
interests) of each of the debtor partnerships. In September 2001, Mr. McGrath's
affiliates assigned their general partnership interests (and limited partnership
interests, as the case may be) in the debtor partnerships to Sigma Renaissance
Corporation. Each second mortgage note described is non-recourse beyond the
property and/or other assets owned by the debtors.


                                       25
<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, which is under development.
The interest of the Exchange Partnership in the second mortgage loans, terms of
the first mortgage loan secured by the property, and other information are
described below.

--------------------------------------------------------------------------------
1.  Blossom Corners Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment property
securing mortgages (number of units
and location):                         Blossom Corners Apartments - Phase II (68
                                       units) Orlando, Florida
--------------------------------------------------------------------------------
Debtor:                                Blossom Corners Apartments II, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
Interest in loans:                     $977,645
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $78,388 (3,561)
--------------------------------------------------------------------------------
Balance due at maturity:               $78,388
--------------------------------------------------------------------------------
Mortgage interest and                  Fixed interest rate of 6% as to $78,388
amortization provisions:               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). The loan requires payments of
                                       interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         4/2002
--------------------------------------------------------------------------------
Annual interest payable:               $4,703 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $391
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $978,297; the loan matures 11/2006, has
first mortgage loan secured by         a balance due at maturity of $869,558,
property and other terms:              bears interest at a fixed annual rate of
                                       9.04%, has annual and monthly debt
                                       service requirements of $106,084 and
                                       $8,840, 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.
--------------------------------------------------------------------------------


                                       26
<PAGE>

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

--------------------------------------------------------------------------------
2.  Lake Sycamore Second Mortgage Loan:
--------------------------------------------------------------------------------

Condominium apartment property
securing mortgages (number of Units    Villas at Lake Sycamore (164 townhomes
and location):                         under development), Cincinnati, Ohio (12
                                       of 26 units in Phase I built and sold;
                                       Phase II is 20 acres of undeveloped
                                       land)
--------------------------------------------------------------------------------
Debtor:                                Sycamore Real Estate Development, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
Interest in loan:                      $230,000
--------------------------------------------------------------------------------
12/31/2001 principal balance of
Exchange Partnership's 100%
interest in loan (accrued unpaid
interest):                             $230,000  ($96,333)
--------------------------------------------------------------------------------
Balance due at maturity:               $230,000
--------------------------------------------------------------------------------
12/31/2001 aggregate principal
balance of other second mortgage
loans secured by property and owned
by other Exchange Partnerships
(accrued unpaid interest ):            $320,500  ($108,209)
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       quarterly payments of interest only
                                       until maturity.
--------------------------------------------------------------------------------
Maturity date:                         12/2003
--------------------------------------------------------------------------------
Annual interest payable:               $27,600
--------------------------------------------------------------------------------
Monthly interest payable:              $2,300
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,041,506; bears interest at an annual
first mortgage loan secured by         adjustable rate equal to lender's prime
property and other terms:              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. Interest has
                                       been paid through 10/2001. The debtor
                                       defaulted on the loan upon its maturity
                                       in 11/2001. The lender has refused to
                                       accept the debtor's 11/2001 interest
                                       payment and has accelerated the loan.
                                       Sigma Renaissance Corporation
                                       (controlled by Jerome S. Rydell, a
                                       member of the Board of Trustees of the
                                       Trust) has been assigned all the general
                                       partnership interests (and in certain
                                       cases, limited partnership interests) in
                                       the debtor by Gregory K. McGrath (a
                                       founder and former Chief Executive
                                       Officer of the Trust and the Operating
                                       Partnership) and his affiliate. Sigma
                                       Renaissance Corporation is in the
                                       process of negotiating with the lender
                                       to bring the loan current.
--------------------------------------------------------------------------------
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 as of 12/31/2001 they
                                       had outstanding principal balances of
                                       $77,000 and $243,500 (with accrued
                                       unpaid interest in the amounts of
                                       $28,049 and $80,160), respectively. The
                                       lending parties have agreed to share the
                                       benefits of the second mortgage on a
                                       pari passu basis.
--------------------------------------------------------------------------------


                                       27
<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:                              $1,378,237
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $1,378,237  ($512,210)
--------------------------------------------------------------------------------
Balance due at maturity:               $1,378,237
--------------------------------------------------------------------------------
Second mortgage loan interests         In 3/97, the Exchange Partnership
of another Exchange Partnership:       received a of loan with a current
                                       principal balance $259,639 (with accrued
                                       unpaid interest of $154,196) 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 9/2002 and is
                                       secured by the Exchange Partnership's
                                       interest in two second mortgage notes
                                       and a second mortgage.
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       payments of interest only until
                                       maturity.
--------------------------------------------------------------------------------
Maturity date:                         4/2008
--------------------------------------------------------------------------------
Annual interest payable:               $165,388
--------------------------------------------------------------------------------
Monthly interest payable:              $13,782
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,539,080; the loan matures in 3/2008,
first mortgage loan secured by         has a balance due at maturity of
property and other terms:              $1,385,953, 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.
--------------------------------------------------------------------------------


                                       28
<PAGE>

                     Baron Strategic Investment Fund V, Ltd.

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

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

Residential apartment property
securing mortgages (number of units
and location):                         Candlewood Apartments - Phase II (33
                                       units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Baron Strategic Investment Fund III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loan:                      $21,000
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $21,000  ($4,800)
--------------------------------------------------------------------------------
Balance due at maturity:               $21,000
--------------------------------------------------------------------------------
12/31/2001 aggregate principal
balance of other second
mortgage loans secured by
property and owned by other
Exchange Partnerships
(accrued unpaid interest):             $143,500  ($52,430)
--------------------------------------------------------------------------------
Second mortgage interests of other     Baron Strategic Investment Fund VI, Ltd.
Exchange Partnerships in Property:     ("Baron Fund VI") and Baron Strategic
                                       Investment Fund IX, Ltd. ("Baron Fund
                                       IX") own separate second mortgage loans
                                       secured by the Candlewood Property. The
                                       original principal balance, aggregate
                                       12/31/2001 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 $24,549) and
                                       $75,500 (accrued unpaid interest of
                                       $27,881), respectively; the annual (and
                                       monthly) payments due them are $8,160
                                       ($680) and $9,060 ($755), respectively.
                                       The other terms relating to Baron Fund
                                       VI's and Baron Fund IX's second mortgage
                                       loans are the same as stated herein in
                                       respect of the Exchange Partnership's
                                       loan.
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       payments of interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         3/2003
--------------------------------------------------------------------------------
Annual interest payable:               $2,520
--------------------------------------------------------------------------------
Monthly interest payable:              $210
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $545,651 ($69,843); the loan matures in
first mortgage loan secured by         2/2003, 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.
--------------------------------------------------------------------------------


                                       29
<PAGE>

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

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

Residential apartment property
securing mortgages (number of units
and location):                         Curiosity Creek Apartments (81 units)
                                       Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Curiosity Creek Apartments, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's
undivided 26.3% interest in
three loans and a 100% interest
in one loan:                           $474,536
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $350,336  ($54,396)
--------------------------------------------------------------------------------
Balance due at maturity:               $350,336
--------------------------------------------------------------------------------
12/31/2001 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  ($118,578)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Vulture Fund I, Ltd.
Partnerships in second mortgage        ("Baron Vulture Fund") owns the
loans:                                 remaining 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 in respect of Baron
                                       Vulture Fund's interest in the loans was
                                       $1,229,575; the aggregate 12/31/2001
                                       principal balance and aggregate balance
                                       due at maturity is $904,692 (accrued
                                       unpaid interest of $118,578); the
                                       aggregate annual and monthly payments
                                       due it are $75,636 and $6,303,
                                       respectively. The other terms relating
                                       to Baron Vulture Fund's interest in the
                                       loans are the same as stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
Amortization provisions:               $212,145 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 5.75%) as to $108,858 of
                                       principal, and (iii) fixed interest rate
                                       of 12.5% as to $29,333 of principal. The
                                       loans require payments of interest only
                                       until maturity.
--------------------------------------------------------------------------------
Maturity date:                         4/2007
--------------------------------------------------------------------------------
Annual interest payable:               $27,558 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $2,297
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,954,245 ($513,966); the loan matures
first mortgage loan secured by         in 5/2008, has a balance due at maturity
property (26.3% of amount)             of $1,122,800, bears interest at the
and other terms:                       fixed annual rate of 7.26%, has annual
                                       and monthly debt service requirements of
                                       $160,607 and $13,384, 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.
--------------------------------------------------------------------------------


                                       30
<PAGE>

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

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

3.  Sunrise Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment
property securing mortgages
(number of units and
location):                             Sunrise Apartments - Phase I (60 units)
                                       Titusville, Florida
--------------------------------------------------------------------------------
Debtor:                                Sunrise Apartments I, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $1,036,450
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $1,020,913  ($42,050)
--------------------------------------------------------------------------------
Balance due at maturity:               $1,020,913
--------------------------------------------------------------------------------
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, (iii) fixed interest rate
                                       of 12% as to $62,931 of principal, and
                                       (iv) fixed interest rate of 8.75% as to
                                       $1,467 of principal. The loans require
                                       payments of interest only until
                                       maturity.
--------------------------------------------------------------------------------
Maturity date:                         10/2007
--------------------------------------------------------------------------------
Annual interest payable:               $53,072 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $4,422
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance           $994,218; the loan matures in 1/2005,
of first mortgage loan                 has a balance due at maturity of
secured by property and                $932,217, bears interest at a fixed
other terms:                           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.
--------------------------------------------------------------------------------


                                       31
<PAGE>

                   Baron Strategic Investment Fund VIII, Ltd.

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

--------------------------------------------------------------------------------
1.  Heatherwood Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment
property securing mortgages
(number of units and
location):                           Heatherwood Apartments - Phase II (41
                                     units) Kissimmee, Florida
--------------------------------------------------------------------------------
Debtor:                              Heatherwood Apartments II, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's undivided
58% interest in loans:               $206,260
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):           $111,213  ($0)
--------------------------------------------------------------------------------
Balance due at maturity:             $111,213
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnership's
undivided 42% in loans (accrued
unpaid interest):                    $181,149  ($24,224)
--------------------------------------------------------------------------------
Interests of other Exchange          Baron Strategic Investment Fund X, Ltd.
Partnership in second mortgage       ("Baron Fund X") owns the remaining
loans:                               undivided 42% interest in the second
                                     mortgage loans secured by the
                                     Heatherwood Property and in the
                                     unsecured loans associated with the
                                     property ("Heatherwood Loans"). The
                                     aggregate original principal balance,
                                     aggregate 12/31/2001 principal balance,
                                     and aggregate balance due at maturity in
                                     respect of Baron Fund X's interest in
                                     the Heatherwood Loans is $181,148
                                     (accrued unpaid interest of $24,224);
                                     the aggregate annual (and monthly)
                                     payments due it are $13,616 ($1,135).
                                     The other terms relating to Baron Fund
                                     X's interest in the Heatherwood Loans
                                     are the same as stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                Fixed interest rate of 6% as to $111,213
amortization provisions:             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). The loans require payments
                                     of interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                       10/2004
--------------------------------------------------------------------------------
Annual interest payable:             $6,996 (plus any participation interest
                                     payable)
--------------------------------------------------------------------------------
Monthly interest payable:            $583
--------------------------------------------------------------------------------
Prepayment provisions:               Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance         $680,644 ($394,773); the loan matures in
first mortgage loan secured          of 11/2004, has a balance due at
by property (58% of amount)          maturity of $655,856, bears interest at
and other terms:                     a fixed 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.
--------------------------------------------------------------------------------


                                       32
<PAGE>

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

2.  Longwood Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment
property securing mortgages
(number of units and
location):                           Longwood Apartments - Phase I (59 units)
                                     Cocoa, Florida
--------------------------------------------------------------------------------
Debtor:                              Longwood Apartments I, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                   $969,268
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest ):          $969,268  ($138,404)
--------------------------------------------------------------------------------
Balance due at maturity:             $969,268
--------------------------------------------------------------------------------
Mortgage interest and                (i) Fixed interest rate of 6% as to
amortization provisions:             $368,558 of principal (plus
                                     non-cumulative participation interest at
                                     the rate of 3% on the unpaid principal
                                     to the extent of available cash flow
                                     plus additional non-cumulative
                                     participation interest equal to 30% of
                                     any remaining available cash flow), (ii)
                                     adjustable interest rate of 1% over
                                     prime rate (currently 5.75%) 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:                       10/2007
--------------------------------------------------------------------------------
Annual interest payable:             $63,807 (plus any participation interest
                                     payable)
--------------------------------------------------------------------------------
Monthly interest payable:            $5,317
--------------------------------------------------------------------------------
Prepayment provisions:               Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance         $994,118; the loan matures in 11/2004,
of first mortgage loan secured       has a balance due at maturity of
by property and other terms:         $1,204,545, bears interest at a fixed
                                     annual rate of 7.75%, has annual and
                                     monthly debt service requirements of
                                     $89,150 and $7,429, respectively,
                                     amortizes on a 30-year basis, and is
                                     prepayable after the fourth anniversary
                                     of the loan, subject to yield
                                     maintenance until the sixth month prior
                                     to maturity, when it can be prepaid at
                                     par.
--------------------------------------------------------------------------------
Other matters:                       Prior to 12/15/98, the Longwood Second
                                     Mortgage Loans consisted of a second
                                     mortgage note with a principal balance
                                     of $368,558, an unsecured demand note
                                     with a principal balance of $526,465,
                                     and advances of $74,245. On 12/15/98,
                                     the debtor restated and amended the
                                     second mortgage note and the demand note
                                     and created a new promissory note in the
                                     original principal amount of $74,245 (to
                                     cover prior advances). The debtor and
                                     the Exchange Partnership also entered
                                     into a mortgage modification agreement.
                                     Pursuant to the arrangement, the
                                     Exchange Partnership agreed to set the
                                     maturity date on the demand note and the
                                     advances at the same maturity date as
                                     the second mortgage note, in exchange
                                     for the debtor's agreement to secure its
                                     repayment obligations on the demand note
                                     and advances with a second mortgage on
                                     the Longwood Property.
--------------------------------------------------------------------------------


                                       33
<PAGE>

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

--------------------------------------------------------------------------------
3.  Lake Sycamore Second Mortgage Loan:
--------------------------------------------------------------------------------

Condominium apartment property
securing mortgages (number of
units and location):                 Villas at Lake Sycamore (164 townhomes
                                     under development) Cincinnati, Ohio (12 of
                                     26 units in Phase I built and sold; Phase
                                     II is 20 acres of undeveloped land)
--------------------------------------------------------------------------------
Debtor:                              Sycamore Real Estate Development, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loan:                    $98,000
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):           $77,000  ($28,049)
--------------------------------------------------------------------------------
Balance due at maturity:             $77,000
--------------------------------------------------------------------------------
12/31/2001 aggregate
principal
balance of other second
mortgage loans secured by
property and owned by other
Exchange Partnerships
(accrued unpaid interest):           $473,500  ($176,493)
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:             Fixed interest rate of 12%; requires
                                     quarterly payments of interest only until
                                     maturity.
--------------------------------------------------------------------------------
Maturity date:                       12/2003
--------------------------------------------------------------------------------
Annual interest payable:             $9,240
--------------------------------------------------------------------------------
Monthly interest payable:            $770
--------------------------------------------------------------------------------
Prepayment provisions:               Prepayable without penalty
--------------------------------------------------------------------------------
12/31/2001 principal balance         $1,041,506; bears interest at an annual
of first mortgage loan secured       adjustable rate equal to lender's prime
by property and other terms:         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. Interest has
                                     been paid through 10/2001. The debtor
                                     defaulted on the loan upon its maturity
                                     in 11/2001. The lender has refused to
                                     accept the debtor's 11/2001 interest
                                     payment and has accelerated the loan.
                                     Sigma Renaissance Corporation
                                     (controlled by Jerome S. Rydell, a
                                     member of the Board of Trustees of the
                                     Trust) has been assigned all the general
                                     partnership interests (and in certain
                                     cases, limited partnership interests) in
                                     the debtor by Gregory K. McGrath (a
                                     founder and former Chief Executive
                                     Officer of the Trust and the Operating
                                     Partnership) and his affiliate. Sigma
                                     Renaissance Corporation is in the
                                     process of negotiating with the lender
                                     to bring the loan current.
--------------------------------------------------------------------------------
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 as of 12/31/2001 they had
                                     outstanding principal balances of
                                     $230,000 and $243,500 (and accrued unpaid
                                     interest of $96,333 and $80,160),
                                     respectively. The lending parties have
                                     agreed to share the benefits of the
                                     second mortgage on a pari passu basis.
--------------------------------------------------------------------------------


                                       34
<PAGE>

                      Baron Strategic Vulture Fund I, Ltd.

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

--------------------------------------------------------------------------------
Curiosity Creek Second Mortgage Loans:
--------------------------------------------------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                 Curiosity Creek Apartments  (81 units)
                                     Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                              Curiosity Creek Apartments, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's
undivided 73.7% interest in
three loans and 100% interest
in one loan:                         $1,243,847
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):           $1,243,847  ($118,578)
--------------------------------------------------------------------------------
Balance due at maturity:             $1,243,847
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnership's
undivided 26.3% in three loans
and 100% interest in one loan
(accrued unpaid interest):           $350,336 ($54,396)
--------------------------------------------------------------------------------
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 in
                                     respect of Baron Fund V's interest in the
                                     Curiosity Creek Second Mortgage Loans was
                                     $474,536; the aggregate 12/31/2001
                                     principal balance and aggregate balance
                                     due at maturity is $350,336 (accrued
                                     unpaid interest of $54,396); the
                                     aggregate annual and monthly payments due
                                     it are $27,558 and $2,297, respectively.
                                     The other terms relating to Baron Fund
                                     V's interest in the Curiosity Creek
                                     Second Mortgage Loans are the same as
                                     stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                (i) Fixed interest rate of 6% as to
amortization provisions:             $595,333 of principal (plus
                                     non-cumulative participation interest at
                                     the rate of 3% on the unpaid principal to
                                     the extent of available cash flow plus
                                     additional non-cumulative participation
                                     interest equal to 30% of any remaining
                                     available cash flow), (ii) adjustable
                                     interest rate of prime plus 1% (currently
                                     8.75%) as to $305,407 of principal, (iii)
                                     fixed interest rate of 12.5% as to
                                     $306,675 of principal, and (iv) fixed
                                     interest rate of 12% as to $36,431 of
                                     principal. The loans require payments of
                                     interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                       4/2007
--------------------------------------------------------------------------------
Annual interest payable:             $75,636 (plus any participation interest
                                     payable)
--------------------------------------------------------------------------------
Monthly interest payable:            $6,303
--------------------------------------------------------------------------------
Prepayment provisions:               Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of      $1,954,245 ($1,440,278); the loan matures
first mortgage loan secured by       in 5/2008, has a balance due at maturity
property (73.7% of amount)           of $1,692,068, bears interest at the
and other terms:                     fixed annual rate of 7.26%, has annual
                                     and monthly debt service requirements of
                                     $160,607 and $13,384, respectively,
                                     amortizes on a 30-year basis, and is
                                     prepayable after the fourth anniversary
                                     of the loan subject to defeasance
                                     provisions in the mortgage note.
--------------------------------------------------------------------------------


                                       35
<PAGE>

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

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


                                       36
<PAGE>

                         Brevard Mortgage Program, Ltd.

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

--------------------------------------------------------------------------------
Meadowdale Second Mortgage Loans:
--------------------------------------------------------------------------------
Residential apartment property
securing mortgages (number of units
and location):                         Meadowdale Apartments (64 units)
                                       Melbourne, Florida
--------------------------------------------------------------------------------
Debtor:                                Florida Opportunity Income Fund III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loans:                     $1,048,861
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $1,048,861  ($272,185)
--------------------------------------------------------------------------------
Balance due at maturity:               $1,048,861
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
amortization provisions:               $752,747 of principal (plus
                                       non-cumulative participation interest at
                                       the rate of 3% on the unpaid principal to
                                       the extent of available cash flow plus
                                       additional non-cumulative participation
                                       interest equal to 20% of any remaining
                                       available cash flow), (ii) adjustable
                                       interest rate of 1% over prime rate
                                       (currently 5.75%) as to $271,923 of
                                       principal and (iii) fixed rate of 12% as
                                       to $24,191 of principal.
--------------------------------------------------------------------------------
Maturity date:                         10/2007
--------------------------------------------------------------------------------
Annual interest payable:               $65,732 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $5,478
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance           $975,000; the loan matures in 11/2006,
of first mortgage loan secured by      has a balance due at maturity of
property and other terms:              $809,175, bears interest at an initial
                                       rate of 7.25% increasing by .125% each
                                       year for five years, has annual and
                                       monthly debt service requirements of
                                       $97,200 and $8,100 in year 1,
                                       respectively and amortizes on a 16-year
                                       basis.
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------


                                       37
<PAGE>

                          EXCHANGE HYBRID PARTNERSHIPS

                    Baron Strategic Investment Fund VI, Ltd.

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

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

Residential apartment property
securing mortgages (number of
units and location):                   Candlewood Apartments - Phase II (33
                                       units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Baron Strategic Investment Fund III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's interest in
loan:                                  $68,000
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $68,000  ($24,549)
--------------------------------------------------------------------------------
Balance due at maturity:               $68,000
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other second mortgage loans
secured by the property and
owned by other Exchange
Partnerships (accrued unpaid
interest):                             $96,500 ($32,681)
--------------------------------------------------------------------------------
Second mortgage interests of other     Baron Strategic Investment Fund V, Ltd.
Exchange Partnerships in the           ("Baron Fund V") and Baron Strategic
Property:                              Investment Fund IX, Ltd. ("Baron Fund
                                       IX") own separate second mortgage loans
                                       secured by the Candlewood Property. The
                                       original principal balance, aggregate
                                       12/31/2001 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 $4,800) and
                                       $75,500 (accrued unpaid interest of
                                       $27,881), respectively; the annual (and
                                       monthly) payments due them are $2,540
                                       ($211) and $9,060 ($755), respectively.
                                       The other terms relating to Baron Fund
                                       V's and Baron Fund IX's loans are the
                                       same as stated herein in respect of the
                                       Exchange Partnership's loan.
--------------------------------------------------------------------------------
Mortgage interest and                  Fixed interest rate of 12%; requires
Amortization provisions:               payments of interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         3/2003
--------------------------------------------------------------------------------
Annual interest payable:               $8,160
--------------------------------------------------------------------------------
Monthly interest payable:              $680
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $545,651 ($225,354); the loan matures in
first mortgage loan secured by         2/2003, has a balance due at maturity of
property (41.3% 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.
--------------------------------------------------------------------------------


                                       38
<PAGE>

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

--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the Candlewood Second
                                       Mortgage Loan consisted of an unsecured
                                       demand note with a principal balance of
                                       $68,000. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       second mortgage agreement under which the
                                       debtor agreed to secure its repayment
                                       obligation on the note with a second
                                       mortgage on the Candlewood Property. At
                                       the same time, the debtor agreed to
                                       secure the loans in favor of Baron Fund V
                                       and Baron Fund IX with separate mortgages
                                       on the property. The lending parties have
                                       agreed to share the benefits of the
                                       second mortgages on a pari passu basis.
--------------------------------------------------------------------------------

2.  Garden Terrace Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment property
Securing mortgages (number of
units and location):                   Garden Terrace Apartments - Phase III
                                       (91 units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Garden Terrace Apartments III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's undivided 20%
interest in loan:                      $248,353
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $248,353  ($19,283)
--------------------------------------------------------------------------------
Balance due at maturity:               $248,353
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnerships'
undivided 80% in loan (accrued
unpaid interest):                      $993,414  ($102,309)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund IX, Ltd.
Partnerships in second mortgage        ("Baron Fund IX") and Baron Strategic
loans:                                 Investment Fund X, Ltd. ("Baron Fund X")
                                       own the remaining undivided 80% interest
                                       in the second mortgage loans secured by
                                       the Garden Terrace Property ("Garden
                                       Terrace Second Mortgage Loans"). The
                                       original principal balance, 12/31/2001
                                       principal balance, and balance due at
                                       maturity in respect of Baron Fund IX's
                                       and Baron Fund X's interest in the Garden
                                       Terrace Second Mortgage Loans are
                                       $310,442 (accrued unpaid interest of
                                       $24,342) and $682,972 (accrued unpaid
                                       interest of $77,967), respectively; the
                                       annual (and monthly) payments due them
                                       are $27,940 ($2,328) and $61,467
                                       ($5,122), respectively. The other terms
                                       relating to Baron Fund IX's and Baron
                                       Fund X's interest in the Garden Terrace
                                       Second Mortgage Loans are the same as
                                       stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 2% as to
Amortization provisions:               $147,000 of principal if cash flow
                                       available (plus non-cumulative
                                       participation interest at the rate of 7%
                                       on the unpaid principal to the extent of
                                       available cash flow, plus additional
                                       participation interest equal to 30% of
                                       any remaining cash flow (payable to
                                       holders of note only after payment of
                                       interest due on the 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:                         1/2007
--------------------------------------------------------------------------------
Annual interest payable:               $22,353 (plus any additional
                                       participation interest)
--------------------------------------------------------------------------------
Monthly interest payable:              $1,863
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $914,509 ($182,901); the loan matures in
first mortgage loan secured by         5/2005, has a balance due at maturity of
property (20% of amount)               $822,063, bears interest at the fixed
and other terms:                       annual rate of 8.31%, has annual and
                                       monthly debt and service requirements of
                                       $96,047 and $8,004, respectively
                                       amortizes on a 25-year basis may be
                                       prepaid beginning 4/99 with a 5%
                                       prepayment fee, which decreases 1% per
                                       year until maturity.
--------------------------------------------------------------------------------


                                       39
<PAGE>

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

3.  Note Payable by Baron Strategic Investment
     Fund IV, Ltd. ("Baron Fund IV"):
--------------------------------------------------------------------------------

12/31/2001 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  ($154,196)
--------------------------------------------------------------------------------

12/31/2001 principal balance of
Baron Fund IV's second mortgage
loans secured by property (accrued
unpaid interest ):                     $1,192,987  ($424,054)
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,539,080; the loan matures in 3/2008,
first mortgage loan                    has a balance due at maturity of
secured by property:                   $1,385,953, 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 9/2002 and is
                                       secured by Baron Fund IV's interest in
                                       the second mortgage note and second
                                       mortgage.
--------------------------------------------------------------------------------


                                       40
<PAGE>

                    Baron Strategic Investment Fund IX, Ltd.

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

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

--------------------------------------------------------------------------------
Residential apartment property
securing mortgages (number of
units and location):                   Candlewood Apartments - Phase II (33
                                       units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Baron Strategic Investment Fund III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
Interest in loan:                      $75,500
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $75,500  ($27,881)
--------------------------------------------------------------------------------
Balance due at maturity:               $75,500
--------------------------------------------------------------------------------
12/31/2001 aggregate principal
balance of other second
mortgage loans secured by
property and owned by other
Exchange Partnerships
(accrued unpaid interest):             $89,000  ($29,349)
--------------------------------------------------------------------------------
Second mortgage interests of other     Baron Strategic Investment Fund V, Ltd.
Exchange Partnerships in               ("Baron Fund V") and Baron Strategic
Property:                              Investment Fund VI, Ltd. ("Baron Fund
                                       VI") own separate second mortgage loans
                                       secured by the Candlewood Property. The
                                       original principal balance, aggregate
                                       12/31/2001 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 $4,800) and
                                       $68,000 (accrued unpaid interest of
                                       $24,549), respectively; the annual (and
                                       monthly) payments due them are $2,520
                                       ($210) and $8,160 ($680), respectively.
                                       The other terms relating to Baron Fund
                                       V's and Baron Fund VI's loans are the
                                       same as stated herein in respect of the
                                       Exchange Partnership's loan.
--------------------------------------------------------------------------------
Mortgage interest and                  Fixed interest rate of 12%; requires
Amortization provisions:               payments of interest only until maturity.
--------------------------------------------------------------------------------
Maturity date:                         3/2003
--------------------------------------------------------------------------------
Annual interest payable:               $9,060
--------------------------------------------------------------------------------
Monthly interest payable:              $755
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $545,651 ($250,454); the loan matures in
first mortgage loan secured by         2/2003, 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.
--------------------------------------------------------------------------------


                                       41
<PAGE>

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

--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the Candlewood Second
                                       Mortgage Loan consisted of an unsecured
                                       demand note with a principal balance of
                                       $75,500. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       second mortgage agreement under which the
                                       debtor agreed to secure its repayment
                                       obligation on the note with a second
                                       mortgage on the Candlewood Property. At
                                       the same time, the debtor agreed to
                                       secure the loans in favor of Baron Fund V
                                       and Baron Fund VI with separate second
                                       mortgages on the property. The lending
                                       parties have agreed to share the benefits
                                       of the second mortgages on a pari passu
                                       basis.
--------------------------------------------------------------------------------

2.  Garden Terrace Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment property
securing mortgages (number of
units and location):                   Garden Terrace Apartments - Phase III (91
                                       units) Tampa, Florida
--------------------------------------------------------------------------------
Debtor:                                Garden Terrace Apartments III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's undivided 25%
interest in loans:                     $310,442
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $310,442  ($24,342)
--------------------------------------------------------------------------------
Balance due at maturity:               $310,442
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnerships'
undivided 75% interest in loans
(accrued unpaid interest):             $931,325  ($97,250)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund VI, Ltd.
Partnerships in second mortgage        ("Baron Fund VI") and Baron Strategic
loans:                                 Investment Fund X, Ltd. ("Baron Fund X")
                                       own the remaining undivided 75% interest
                                       in the second mortgage loans secured by
                                       the Garden Terrace Property ("Garden
                                       Terrace Second Mortgage Loans"). The
                                       original principal balance, 12/31/2001
                                       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 $19,283) and
                                       $682,972 (accrued unpaid interest of
                                       $77,967), respectively, the annual (and
                                       monthly) payments due them are $22,353
                                       ($1,863) and $61,467 ($5,122),
                                       respectively. The other terms relating to
                                       Baron Fund VI's and Baron Fund X's
                                       interest in the Garden Terrace Second
                                       Mortgage Loan are the same as stated
                                       herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 2% as to
Amortization provisions:               $183,750 of principal if cash flow
                                       available (plus non-cumulative
                                       participation interest at the rate of 7%
                                       on the unpaid principal to the extent of
                                       available cash flow, plus additional
                                       participation interest equal to 30% of
                                       any remaining cash flow (payable to
                                       holders of note only after payment of
                                       interest on the 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:                         1/2007
--------------------------------------------------------------------------------
Annual interest payable:               $27,940 (plus any additional
                                       participation interest)
--------------------------------------------------------------------------------
Monthly interest payable:              $2,328
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $914,509 ($228,627); the loan matures in
first mortgage loan secured by         5/2005, 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.
--------------------------------------------------------------------------------


                                       42
<PAGE>

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

3.  Lake Sycamore Second Mortgage Loan:
--------------------------------------------------------------------------------
Condominium apartment
property securing mortgages
(number of
units and location):                   Villas at Lake Sycamore (164 townhomes
                                       under development) Cincinnati, Ohio (12
                                       of 26 units in Phase I built and sold;
                                       Phase II is 20 acres of undeveloped land)
--------------------------------------------------------------------------------
Debtor:                                Sycamore Real Estate Development, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's 100%
interest in loan:                      $243,500
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $243,500  ($80,160)

--------------------------------------------------------------------------------
Balance due at maturity:               $243,500
--------------------------------------------------------------------------------
12/31/2001 aggregate principal
balance of other second
mortgage loans secured by
property and owned by other
Exchange Partnerships
(accrued unpaid interest):             $307,000  ($124,382)
--------------------------------------------------------------------------------
Mortgage interest and
amortization provisions:               Fixed interest rate of 12%; requires
                                       quarterly payments of interest only until
                                       maturity.
--------------------------------------------------------------------------------
Maturity date:                         12/2003
--------------------------------------------------------------------------------
Annual interest payable:               $29,220
--------------------------------------------------------------------------------
Monthly interest payable:              $2,435
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,041,506; bears interest at the annual
first mortgage loan secured by         adjustable rate equal to lender's prime
property and other items:              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. Interest has
                                       been paid through 10/2001. The debtor
                                       defaulted on the loan upon its maturity
                                       in 11/2001. The lender has refused to
                                       accept the debtor's 11/2001 interest
                                       payment and has accelerated the loan.
                                       Sigma Renaissance Corporation (controlled
                                       by Jerome S. Rydell, a member of the
                                       Board of Trustees of the Trust) has been
                                       assigned all the general partnership
                                       interests (and in certain cases, limited
                                       partnership interests) in the debtor by
                                       Gregory K. McGrath (a founder and former
                                       Chief Executive Officer of the Trust and
                                       the Operating Partnership) and his
                                       affiliate. Sigma Renaissance Corporation
                                       is in the process of negotiating with the
                                       lender to bring the loan current.
--------------------------------------------------------------------------------
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 as of 12/31/2001 they had principal
                                       balances of $230,000 and $77,000 (accrued
                                       unpaid interest of $96,333 and $28,049),
                                       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 (1) a 47.59% limited partnership interest in a limited
partnership which holds fee simple title to the Crystal Court Property-Phase I,
(2) a 41.71% limited partnership interest in a limited partnership which holds
fee simple title to the Pineview Property, (3) an undivided interest in an
unrecorded second mortgage loan secured by the Heatherwood Property-Phase II and
in three unsecured loans associated with such property, and (4) an undivided
interest in two recorded second mortgage loans secured by the Garden Terrace
Property-Phase III. 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 Heatherwood Property and the Garden Terrace 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:                 $181,148
--------------------------------------------------------------------------------
12/31/2001  principal balance
(accrued unpaid interest):             $181,148  ($24,224)
--------------------------------------------------------------------------------
Balance due at maturity:               $181,148
--------------------------------------------------------------------------------
12/31/2001 principal balance of
other Exchange Partnership's
undivided 58% in loans (accrued
unpaid interest):
                                       $111,213  ($0)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund VIII,
Partnership in second                  Ltd. ("Baron Fund VIII") owns the
mortgage 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 in respect of
                                       Baron Fund VIII's interest in the
                                       Heatherwood Loans was $206,260; the
                                       aggregate 12/31/2001 principal balance
                                       and aggregate balance due at maturity is
                                       $111,213 (accrued unpaid interest of $0);
                                       the aggregate annual (and monthly)
                                       payments due it are $6,996 ($583). The
                                       other terms relating to Baron Fund VIII's
                                       interest in the Heatherwood Loans are the
                                       same as stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 6% as to
Amortization provisions:               $136,500 of principal (plus
                                       non-cumulative participation interest at
                                       the rate of 3% on the unpaid principal to
                                       the extent of available cash flow plus
                                       additional non-cumulative participation
                                       interest equal to 30% of any remaining
                                       available cash flow), (ii) adjustable
                                       interest rate of 1% over prime rate
                                       (currently 8.75%) as to $732 of
                                       principal, and (iii) fixed interest rate
                                       of 12% as to $43,917 of principal. The
                                       loans require payments of interest only
                                       until maturity.
--------------------------------------------------------------------------------
Maturity date:                         10/2004
--------------------------------------------------------------------------------
Annual interest payable:               $13,616 (plus any participation interest
                                       payable)
--------------------------------------------------------------------------------
Monthly interest payable:              $1,135
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------


                                       44
<PAGE>

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

--------------------------------------------------------------------------------
12/31/2001 principal balance           $680,644 ($285,870); the loan matures in
of first mortgage loan                 11/2004, has a balance due at maturity of
secured by property (42% of            $655,856, bears interest at a fixed
amount) and other terms:               annual rate of 7.75%, has annual and
                                       monthly debt service and requirements of
                                       $61,038 and $5,087, respectively,
                                       amortizes on a 30-year basis, and is
                                       prepayable after the fourth anniversary
                                       of the loan, subject to yield maintenance
                                       until the sixth month prior to maturity,
                                       when it can be prepaid at par.
--------------------------------------------------------------------------------
Other matters:                         The Heatherwood Loans consist of a second
                                       mortgage note secured by the Heatherwood
                                       Property with a principal balance
                                       $285,680 and unsecured loans in the
                                       aggregate principal amount of $6,361.
--------------------------------------------------------------------------------

2.  Garden Terrace Second Mortgage Loans:
--------------------------------------------------------------------------------

Residential apartment
property securing mortgages
(number of units and
location):                             Garden Terrace Apartments - Phase III
                                       (91 units) Orlando, Florida
--------------------------------------------------------------------------------
Debtor:                                Garden Terrace Apartments III, Ltd.
--------------------------------------------------------------------------------
Original principal amount of
Exchange Partnership's undivided
55% interest in loan:                  $682,972
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $682,972  ($77,967)
--------------------------------------------------------------------------------
Balance due at maturity:               $682,972
--------------------------------------------------------------------------------
12/31/2001 principal balance
of other Exchange
Partnerships' undivided 45% in
loan (accrued unpaid interest):
                                       $558,795  ($43,625)
--------------------------------------------------------------------------------
Interests of other Exchange            Baron Strategic Investment Fund VI, Ltd.
Partnerships in second mortgage        ("Baron Fund VI") and Baron Strategic
loans:                                 Investment Fund IX, Ltd. ("Baron Fund
                                       IX") own the remaining undivided 45%
                                       interest in the second mortgage loans
                                       secured by the Garden Terrace Property
                                       ("Garden Terrace Second Mortgage Loans").
                                       The original principal balance,
                                       12/31/2001 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
                                       $19,283) and $310,442, (accrued unpaid
                                       interest of $24,342), respectively; the
                                       annual (and monthly) payments due them
                                       are $22,353 ($1,863) and $27,940
                                       ($2,328), respectively. The other terms
                                       relating to Baron Fund VI's and Baron
                                       Fund IX's interest in the Garden Terrace
                                       Second Mortgage Loans are the same as
                                       stated herein.
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Fixed interest rate of 2% as to
Amortization provisions:               $404,250 of principal if cash flow
                                       available (plus non-cumulative
                                       participation interest at the rate of 7%
                                       on the unpaid principal to the extent of
                                       available cash flow, plus additional
                                       participation interest equal to 30% of
                                       any remaining cash flow (payable to
                                       holders of note only after payment of
                                       interest due on the note referred to in
                                       (ii) below) and (ii) fixed interest rate
                                       of 9% as to $278,722 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:                         1/2007
--------------------------------------------------------------------------------
Annual interest payable:               $61,467 (plus any additional
                                       participation interest)
--------------------------------------------------------------------------------
Monthly interest payable:              $5,122
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------


                                       45
<PAGE>

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

--------------------------------------------------------------------------------
12/31/2001 principal balance           $914,509 ($502,979); the loan matures in
first mortgage loan                    5/05, of has a balance due at maturity of
secured by property (55% of            $822,063, bears interest at the fixed
amount) 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 1/1/2007 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
--------------------------------------------------------------------------------
12/31/2001 principal balance
(accrued unpaid interest):             $678,302  ($270,533)
--------------------------------------------------------------------------------
Balance due at maturity:               $678,302
--------------------------------------------------------------------------------
Mortgage interest and                  (i) Adjustable interest rate of 1% over
amortization provisions:               prime rate (currently 5.75%) 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:                         12/2006
--------------------------------------------------------------------------------
Annual interest payable:               $44,834
--------------------------------------------------------------------------------
Monthly interest payable:              $3,736
--------------------------------------------------------------------------------
Prepayment provisions:                 Prepayable without penalty.
--------------------------------------------------------------------------------
12/31/2001 principal balance of        $1,304,396; the loan matures in 11/2006,
first mortgage loan secured by         has a balance due at maturity of
property and other terms:              $1,158,349, bears interest at a fixed
                                       annual rate of 9.04%, has annual and
                                       monthly debt service requirements of
                                       $141,445 and $11,787, respectively,
                                       amortizes on a 25-year basis, and is
                                       prepayable after the fifth anniversary of
                                       the loan, provided that in the sixth and
                                       seventh years prepayment requires a fee
                                       equal to the greater of 1% of the prepaid
                                       amount or yield maintenance.
--------------------------------------------------------------------------------
Other matters:                         Prior to 12/15/98, the Lamplight Court
                                       Second Mortgage Loans consisted of a
                                       second mortgage note with a principal
                                       balance of $585,000 and an unsecured
                                       demand note with a principal balance of
                                       $93,302. On 12/15/98, the debtor and the
                                       Exchange Partnership entered into a
                                       mortgage modification agreement under
                                       which the Exchange Partnership agreed to
                                       set the maturity date on the demand note
                                       at 12/2006, 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 Trust seeks to: (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 will make pro rata distributions to their Shareholders and
Limited Partners of net income, if any, generated from investments in property
interests as cash flow allows. 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 make 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.
Subordinated mortgages securing loans to be provided or acquired by the Trust or
the Operating Partnership may or may not be recorded. None of the subordinated
mortgage interests acquired by the Operating Partnership as of the date of this
Report have been recorded due to restrictions contained in the underlying first
mortgage loan documents. (See "- Trust Policies with Respect to Certain
Activities - Investment Policies"


                                       48
<PAGE>

below). 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.

     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 Operating Partnership acquires an
interest will be similarly managed.

     The Trust intends to utilize one or more sources of capital for future
acquisitions and capital improvements, which may include undistributed cash
flow, borrowings, issuance of debt or equity securities and other bank and/or
institutional borrowings. The Trust intends to investigate making an additional
public or private offering of Common Shares and/or Units within the next
12-month period if the Board of the Trust determines that suitable property
acquisition opportunities that 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 Board of Trustees of the Trust and under the
Declaration of Trust may be amended or revised from time to time at the
discretion of the Board with approval of a majority in interest of the
Shareholders entitled to vote on such matters. Section 1.9 of the Declaration of
Trust for the Trust contains certain additional limitations on the Trust's
activities.

     At all times, the Trust intends to make investments and conduct its
operations in such a manner as to be consistent with the requirements of the
Code for the Trust to qualify as a REIT unless, because of changing
circumstances or changes in the Internal Revenue Code of 1986, as amended (the
"Code") (or in Treasury Regulations), the Board of Trustees of the Trust, with
the consent of a majority of the Shareholders entitled to vote on such matter
approving the Board'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 Board of
Trustees 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-


                                       49
<PAGE>

scale first mortgage loan provided by a lending institution. In certain cases,
mortgage loans provided or acquired by the Trust may be in the form of first
mortgage loans.

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

     The Board of the Trust has adopted a policy, described below at " -
Conflict of Interest Policies," designed to eliminate or minimize potential
conflicts of interest which may arise in respect of any residential apartment
property investment opportunity which an Independent Trustee, any other member
of the Board, any member of senior management, 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 Board of Trustees 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 Board of Trustees of the Trust will periodically review the portfolio
of assets which the Trust acquires. Disposition decisions relating to a
particular property will be made based on (but not limited to) the following
factors: (i) potential to continue to increase cash flow and value; (ii) the
sale price; (iii) strategic fit of the property with the rest of the Trust's
portfolio; (iv) potential for, or the existence of, any environmental or
regulatory problems; (v) alternative uses of capital; and (vi) maintaining
qualification as a REIT. Any decision to dispose of a property will be made by
the Board of Trustees. The prohibitions in the Code and related regulations on a
REIT holding property for sale may affect the Trust's ability to sell properties
without adversely affecting distributions to Shareholders and Unitholders.

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


                                       50
<PAGE>

     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.

     To the extent that the Board of Trustees 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.

     Senior management of the Trust has discretion in day to day management and
control of the affairs of the Trust and the Operating Partnership, subject to
(i) general supervision and review by the Independent Trustees and the other
members of the Board of Trustees of the Trust and (ii) prior approval authority
of a majority of the Board and/or of a majority of the Independent Trustees in
respect of certain actions of the Trust and the Operating Partnership. The
Declaration of the Trust requires that a majority of the Board of the Trust be
comprised of Independent Trustees. Two of the three current members of the Board
of Trustees are Independent Trustees.

     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 members of senior management, Independent Trustees,
any other members of the Board of Trustees 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 a member of
senior management, a Trustee, any other member of the Board of Trustees 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 Trustees 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 members of senior management, an Independent Trustee,
any other member of the Board, 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


                                       51
<PAGE>


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

Property Description

     The Acquired Properties and the Exchange Properties in which the Trust
currently owns an interest are primarily garden style, one and two-story
residential apartment dwellings which range in size from eight units to 164
units. The Trust believes that the Acquired Properties and the Exchange
Properties generally occupy strategic locations in growing sub-markets. The
average unit size for properties is 640 square feet, with 25% of the units
having two or more bedrooms. A majority of the units have washer/dryer
connections and walk-in closets. Certain of the properties have improved their
attractiveness by investing in extensive landscaping and rehabilitating certain
units. Other features included in certain properties are swimming pools,
playgrounds, volleyball courts, fitness centers and community rooms.

     Each of the Acquired Properties and Exchange Properties is a residential
apartment property and in one case, a condominium apartment property; 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, with the
exception of any home businesses being conducted from units. Other information
concerning the Acquired Properties and the Exchange Properties is set forth
above in this item.

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

Lease Agreements

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

Competition

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


                                       52
<PAGE>


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 Trust 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.


ITEM 3. LEGAL PROCEEDINGS

     The Trust was named as defendant in two separate actions alleging
discriminatory firing at Blossom Corners Apartments. The Trust believes the
charges to be without merit and has engaged counsel for defense. Any exposure
over $150,000 is covered by employment practices insurance. The Trust is a party
to various other legal actions resulting from its operating activities. These
actions are routine litigation and administrative proceedings arising in the
ordinary course of business, some which are covered by liability insurance, and
none of which are expected to have a material adverse effect on the consolidated
financial condition or results of operations of the Trust taken as a whole.

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 1, 2002, there are approximately 466 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, representing
return of capital. The Trust has not made a distribution since September 1999
due to significant open accounts payable relating to the Cash Offering and the
Exchange Offering. Such accounts payable have been paid. The Trust's ability to
make future distributions will be determined by the net cash flow it has
available to make distributions. The Trust and the Operating Partnership will
make pro rata distributions to their Shareholders and Limited Partners of net
income, if any, generated from investments in property interests as cash flow
allows. See "ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION."


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

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

Forward-looking Statements

     This Management's Discussion and Analysis or Plan of Operation and other
sections of this Report contain certain forward-looking statements within the
meaning of the Securities Litigation Reform Act of 1995 that are based on
current


                                       53
<PAGE>


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

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

     As described elsewhere in this Report, in May 1998, the Trust commenced an
offering (the "Cash Offering") of up to 2,500,000 common shares of beneficial
interest ("Common Shares") in the Trust at a purchase price of $10.00 per share
(maximum proceeds of $25,000,000). In the Cash Offering, which expired on May
31, 2000, the Trust sold 702,076 Common Shares for an aggregate purchase price
of $7,020,763. The Trust contributed the net cash proceeds from the sale of
Common Shares in the Cash Offering ($5,467,858) to the Operating Partnership in
exchange for an equivalent number of units ("Units" or "Operating Partnership
Units") of limited partnership interest in the Operating Partnership.

     As of December 31, 2001, the Trust owned 963,346 Operating Partnership
Units, representing approximately 24% of the then outstanding Units. Such Units
are comprised of the Units acquired by the Trust from the Operating Partnership
with the net proceeds of the Cash Offering and the Units that holders of Units
have elected to exchange into Common Shares in the manner described below. Since
the Units held by the Trust comprise substantially all of its assets, the
operating results of the Trust are primarily dependent upon the operating
results of the Operating Partnership.

     Through the Operating Partnership, the Trust has acquired all or
substantially all the beneficial interests in 16 residential apartment
properties, including the Heatherwood I Apartments (67 studio, one bedroom and
two bedroom units located in Kissimmee, Florida) in June 1998; Crystal Court II
Apartments (80 studio, one bedroom and two bedroom units located in Lakeland,
Florida) in July 1998; Riverwalk Apartments (50 two bedroom units located in New
Smyrna, Florida) in September 1998; and 13 properties acquired as part of the
Exchange Offering in April 2000 (described below). In the Exchange Offering, the
Operating Partnership also acquired subordinated mortgage and other debt
interests in 10 properties.

     In July 1998 the Operating Partnership also acquired a small minority
limited partnership interest in 13 real estate limited partnerships then managed
by affiliates of Gregory K. McGrath (a founder and former Chief Executive
Officer of the Trust and the Operating Partnership and a principal holder of
Operating Partnership Units), including certain of the Exchange Partnerships
which participated in the Exchange Offering and are now controlled and managed
by the Trust.


                                       54
<PAGE>

     During 1998 and 1999, the Operating Partnership also acquired a 40% limited
partnership interest in Alexandria Development, L.P. (the "Alexandria
Partnership"), a Delaware limited partnership which owns Alexandria Apartments,
a 168-unit residential apartment property (the "Alexandria Property") under
development in Alexandria, Kentucky. As of December 31, 2001, 112 of the 168
planned residential units (approximately 67%) had been completed and were in the
rent-up stage. Of the completed units, 72 units had been rented as of November
30, 2001. The aggregate purchase price of the Operating Partnership's interest
was $1,285,000, and it received an option to acquire the remaining limited
partnership interests at the same price per percentage interest (for an
additional option exercise price of approximately $1,950,000). The purchase
price was based on an independent appraisal of the property less all
liabilities, and was approved by the Board of the Trust. During 2000, the
Operating Partnership purchased no additional units and the option expired in
October 2000.

     An affiliate of Mr. McGrath previously controlled the Alexandria
Partnership. It sold the 40% limited partnership interest in the Alexandria
Partnership to the Operating Partnership. In September 2001, Mr. McGrath's
affiliate assigned the remaining 60% limited partnership interest in the
Alexandria Partnership to Sigma Renaissance Corporation (a Michigan corporation
controlled by Jerome S. Rydell, a member of the Board of Trustees of the Trust),
which also became the managing general partner of the Alexandria Partnership.

     In early May 2001, MarCap Corporation filed an action in the United States
District Court for the Northern District of Illinois against WaKul, Inc. (a
telecommunications company controlled by Mr. McGrath), Mr. McGrath, and the
Alexandria Partnership, among other parties, seeking repayment of approximately
$407,000 of indebtedness (plus unspecified interest, attorney's fees and
collection costs) under a telecommunication equipment leasing agreement. Certain
of the equipment was installed at the Alexandria Property. The Alexandria
Partnership guaranteed WaKul, Inc.'s lease payments under the leasing agreement.

         The Alexandria Property is subject to first mortgage construction
financing with a principal balance as of December 31, 2001 of approximately
$8,525,000. The first mortgage is held by Fifth Third Bank. The Alexandria
Partnership defaulted on the first mortgage construction loan when it matured in
December 2000, and the lender has exercised its right to accelerate payment of
the loan. In December 2001, a Kentucky court appointed a receiver to manage the
property. The construction contractor is also owed approximately $890,000 for
construction costs, penalties and interest. Sigma Renaissance Corporation,
acting as the managing general partner of the Alexandria Partnership, recently
caused the partnership to file for bankruptcy protection, and is currently
negotiating with Fifth Third Bank and the construction contractor to address the
defaults.

     In 2000, the Operating Partnership reduced to zero on its records the value
of its investment in the Alexandria Partnership due to the defaults on
indebtedness, recurring losses incurred by the Alexandria Property, a partners'
deficiency, and an updated appraisal that valued the property at an amount less
than the total liabilities owed.

     In September 1998, the Trust entered into an agreement with three real
estate development companies (Brentwood at Southgate, Ltd., Burlington
Residential, Ltd. and The Shoppes at Burlington, Ltd.) to acquire, at the
Trust's option, two luxury residential apartment properties in the development
stage upon the completion of construction. The three development companies were
previously controlled by Mr. McGrath. In September 2001, Mr. McGrath assigned
all of the outstanding partnership interests in the three partnerships to Sigma
Renaissance Corporation. One of the residential apartment properties has been
sold to a third party with the Trust's consent. The remaining residential
property (the "Burgundy Hills Property"), located in Florence, Kentucky (part of
the Cincinnati metropolitan area), is scheduled to have a total of 396 units,
comprised of one, two and three bedroom/one or two bathroom apartments. Due to
events described below, the anticipated date of completion of construction of
the Burgundy Hills Property is uncertain.

     In connection with the transaction, the Trust obtained a right of first
negotiation to purchase the Burgundy Hills Property from its owner, Burlington
Residential, Ltd., upon completion and a right of first refusal to purchase the
property on the same terms offered by a third party. The purchase price is
expected to be approximately $30,000,000. It is contemplated that a significant
portion of that amount would be covered by first mortgage financing. At the
current time the Trust does not have adequate resources to close on the
transaction even if it were interested in doing so and if construction were
completed and it is uncertain whether the Trust will have adequate resources to
complete the transaction upon completion of construction. In addition, as
described below, because the owner of the first mortgage on the property has
assumed control of the management of the Borrower and the development of the
property, the exercisability of the Trust's purchase rights is currently
uncertain.


                                       55
<PAGE>

     In connection with the transaction, the Trust (along with Mr. McGrath)
agreed to co-guarantee long-term first mortgage construction financing provided
by KeyBank National Association ("KeyBank") to Burlington Residential, Ltd.
("Borrower"), the owner of the Burgundy Hills Property. As of December 31, 2001,
approximately $6,478,000 of the first mortgage loan had been drawn down. The
interest rate on the first mortgage loan is KeyBank's prime rate (currently
4.75%) or the LIBOR rate plus 2%. The Trust also agreed that, if the Borrower
failed to comply with the repayment and other obligations under the loan
documents, KeyBank could require the Trust to buy out the bank's position on the
entire amount of the construction loan.

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

         In December 2000, an affiliate of BankOne acquired KeyBank's position
in the Burgundy Hills first mortgage loan. The loan is subject to the same terms
and conditions as that of the original KeyBank loan. Earlier, the BankOne
affiliate had provided additional institutional financing in the principal
amount of $1,576,000 to the Borrower. That loan is secured by a security
interest in partnership interests in the Borrower. Due to a default in payment
of interest due, the BankOne affiliate was assigned rental payments from the
Burgundy Hills Property and took over day-to-day management of the property. It
is intended that this loan would be paid off with the proposed new first
mortgage financing referenced above.

     The BankOne affiliate recently sold the two loans to Burgundy-Boone, LLC,
an Illinois limited liability company, according to the latter's counsel. As a
result, Burgundy-Boone, LLC has assumed control of management of the Borrower
and of the development of the Burgundy Hills Property.

     The Trust, as guarantor of the first mortgage loan, currently has a
contingent liability for its full outstanding amount. According to counsel for
Burgundy-Boone, LLC, as of November 2001, principal and interest payments on the
first mortgage loan are current. However, there can be no assurance that the
first mortgage loan will not again go into default, in which event
Burgundy-Boone, LLC might attempt to begin foreclosure proceedings against the
Burgundy Hills Property in respect of the first mortgage loan.

     Century Construction Inc., the general contractor which performed
construction services on the Burgundy Hills Property, recently filed an action
against the Borrower and Mr. McGrath in Kentucky state court to enforce a
mechanic's lien on the property in the amount of approximately $1,300,000. The
contractor also named KeyBank and the BankOne affiliate in the action, seeking
damages against them on allegations of lender's liability.

     In April 2000, pursuant to a registration statement on Form S-4, the
Operating Partnership completed its Exchange Offering under which it acquired
additional interests in residential apartment properties and one condominium
apartment property. In the Exchange Offering, the Operating Partnership issued
2,449,492 registered Operating Partnership Units in exchange for substantially
all outstanding units of limited partnership interest owned by individual
limited partners ("Exchange Limited Partners") in 23 limited partnerships (the
"Exchange Partnerships"). The Exchange Partnerships directly or indirectly owned
equity and/or debt interests in one or more of 25 residential apartment
properties and one condominium apartment property (the "Exchange Properties")
located in the southeast and mid-west United States.

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

     Following the completion of the Exchange Offering, the Exchange
Partnerships continued to own the same property interests they owned prior to
the offering; substantially all of the limited partnership interests in the 23
Exchange Partnership were owned by the Operating Partnership; Mr. McGrath, for
nominal consideration, assigned to the Trust all of the equity stock in 18 of
the corporate general partners of the Exchange Partnerships ("Corporate General
Partners") and granted to the Board of the Trust a management proxy coupled with
an interest to vote the shares of the remaining five Corporate General Partners;
the Corporate General Partner of


                                       56
<PAGE>

each of the Exchange Partnerships assigned to the Operating Partnership all of
its economic interest in the partnership; and Mr. McGrath caused each Corporate
General Partner to waive its right to receive from its Exchange Partnership any
ongoing fees, effective upon completion of the exchange. As a result of the
foregoing, the Operating Partnership owned substantially all of the economic
interest represented by the equity and debt interests owned by the Exchange
Partnerships and controlled management of such partnerships.

     In April 2001, the Operating Partnership sold its equity interest in one of
the Exchange Properties, Glen Lake Apartments, a 144-unit residential apartment
property located in St. Petersburg, Florida. Management of the Trust determined
to sell the property based on its lack of performance and its need for
substantial and frequent cash infusions. (See Note 5 "Sale of Property" in the
accompanying notes to the consolidated condensed financial statements.)

     Certain of the Exchange Partnerships in which the Operating Partnership
holds an interest own direct or indirect equity interests in 15 Exchange
Properties which consist of an aggregate of 868 residential apartment units
(comprised of studio, one, two, three and four-bedroom units). Certain of the
Exchange Partnerships in which the Operating Partnership holds an interest
directly or indirectly own subordinated mortgage and other debt interests in 10
Exchange Properties, which consist of an aggregate of 590 existing residential
apartment units (studio and one and two bedroom units) and 152 condominium
apartment units (two and three bedroom units) under development. Of the Exchange
Properties in which the Operating Partnership continues to own an interest, 20
properties are located in Florida, three properties in Ohio and one property
each in Georgia and Indiana. The property interests owned by the Trust are
described in further detail at ITEM 2 - DESCRIPTION OF PROPERTIES.

     The table below summarizes the results of operations of the Trust for the
years ended December 31, 2001 and 2000.

                                                      2001             2000
                                                   -----------      -----------
Revenues                                           $ 7,181,005      $ 5,347,412
Real Estate Expenses                               $ 6,272,677      $ 5,629,952
                                                   -----------      -----------
Property Income (Loss)                             $   908,328      $  (255,540)
Administrative Expenses/Other Expenses             $ 2,799,640      $ 3,088,810
                                                   -----------      -----------
Loss Before Extraordinary Items                    $(2,091,312)     $(3,344,350)
Extraordinary Item-Extinguishment of Debt          $ 1,483,974               --
                                                   -----------      -----------
Net Loss                                           $  (607,338)     $(3,344,350)

Operations for the Fiscal Year Ended December 31, 2001 Compared to the Fiscal
Year Ended December 31, 2000

     Revenues increased by $1,806,593 from $5,374,412 for the year ended
December 31, 2000 to $7,181,005 for the year ended December 31, 2001. Real
Estate Expenses for the properties owned by the Trust increased from $5,629,952
for the year ended December 31, 2000 to $6,272,677 for the year ended December
31, 2001. The increases in Revenues and Real Estate Expenses were principally
due to the recognition of a full year's expenses in 2001 versus the nine months
expenses from the date of completion of the Exchange Offering in 2000.
Administrative Expenses decreased by $14,953 from $1,684,196 for the year ended
December 31, 2000 to $1,669,243 for the year ended December 31, 2001. The
decrease in Administrative Expenses was principally due to no management fees in
2001 compared to $332,151 in 2000 and reduced personnel expenses. Other (Income)
Expenses for the year ended December 31, 2001 were $1,330,397. These expenses
were primarily the result of a write-off of related party receivables and cost
associated with refinancing activities which were partially offset by recovery
of previously recognized loan losses. The Trust also recognized extraordinary
income from the extinguishment of debt in connection with the sale of the Glen
Lake property and other extinguishments totaling $1,483,974. The Trust's Net
Loss before extraordinary items for the year ended December 31, 2001 was
$2,091,312 compared to $3,344,350 for the year ended December 31, 2000. The
Trust's Net Loss for the year ended December 31, 2001 was $607,338 compared to
$3,344,350 for the year ended December 31, 2000.

Liquidity and Capital Resources

     Net Cash Provided by/Used in Operating Activities decreased by $1,228,589
from $154,939 cash provided in the year ended December 31, 2000 to $1,073,650
cash used in the year ended December 31, 2001. The decrease in Net Cash Provided
by Operating Activities was principally due to an increase in other assets and a
substantial pay-down of accounts payable coupled with non-cash adjustments for
recovery of previously recognized loan losses and extinguishment of debt. Net
Cash Provided by Investing Activities increased $2,957,885 from $181,333 cash
used for the year ended December 31, 2000 to $2,776,552 cash provided for the
year ended December 31, 2001. The increase was principally due to proceeds from
the sale of the Glen Lake Property net of expenditures for


                                       57
<PAGE>

property improvements. Cash Flow Provided by/Used in Financing Activities
decreased by $310,963 from $13,528 cash provided in the year ended December 31,
2000 to $297,435 cash used in the year ended December 31, 2001. The decrease was
principally due to payments of mortgages payable and notes payable after the
four loan refinancings.

     During 1999 and 2000, the Trust experienced certain cash flow problems and
has, from time to time, experienced difficulties meeting obligations as they
became due. However, as reflected in the accompanying consolidated condensed
financial statements, during 2001, the Trust generated Funds From Operations
(Funds from Operations is a measure of profitability in the REIT industry, which
is measured as net income less depreciation, amortization, and other
non-operating expenses and/or income) of approximately $452,401 versus negative
Funds From Operations of approximately $823,762 during 2000.

     During the first three quarters of 2001, the Operating Partnership
refinanced four of its properties, which generated $1,875,000 of cash to the
Operating Partnership. This cash was used to reduce accounts payable owed by the
Operating Partnership, advance funds for a second round of refinancing, and
establish an escrow for expected major repairs to its Riverwalk property.
Additionally, two underlying assets of certain Exchange Partnerships were
refinanced in the third quarter generating $1,165,000 in cash. This cash was
used to pay down mortgage notes receivables of the Exchange Partnerships that
hold debt interests in properties..

     Management's plans to continue improving liquidity and profitability
encompass the following four strategies:

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

     o    Refinance selected well performing assets;

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

     o    Reduce corporate overhead.

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

     o    In many locations, the market for apartments has started to include
          re-billing of property water costs to tenants. The Trust has initiated
          billing of tenants for their water used at several locations and
          intends to continue implementation of the strategy at other properties
          as the markets permit.

     o    In the second quarter of 2001, the Operating Partnership sold one of
          its properties (Glen Lake Apartments) that, in the past, required
          substantial and frequent cash infusions. Additional properties are
          being evaluated for potential disposition.

     o    The Trust has identified certain of its properties, which are
          performing well and have loans which are small relative to the value
          of the properties, given their excellent performance. Four properties
          were refinanced in the first three quarters of 2001, generating
          sufficient cash for the Trust to pay accounts payable, including those
          owed to professionals for services performed in connection with the
          Exchange Offering, and still have an amount in reserve. All four of
          these properties were refinanced at interest rates lower than the
          prior interest rate on the loans. The Trust received cash proceeds of
          approximately $1,875,000 as a result of refinancing these four
          properties.

     As a result of the re-financing of the four properties discussed above and
the refinancing of two underlying assets on certain Exchange Partnerships in
2001, the Trust had approximately $1,426,375 in available cash at December 31,
2001.

     Management believes that the actions presently being taken by the Trust,
including the cash realized upon refinancing properties as described above and
its cash on hand, provide the opportunity for the Trust to improve liquidity and
profitability. The completion in April 2000 of the Exchange Offering has, in the
opinion of management, provided the critical mass necessary for profitable
operations. The Trust will make distributions to its Shareholders of net income,
if any, generated from investments in property interests as cash flow allows.

     The Trust and the Operating Partnership intend to use securities of the
Trust and the Operating Partnership (including Common Shares and Units),
proceeds from future sales of such securities, and available operating cash flow
and financing from other sources to acquire interests in additional residential
apartment properties or interests in other partnerships substantially all of
whose assets consist of residential apartment property interests, and payment of
applicable fees and expenses.

     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 own or acquire an equity or debt 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


                                       58
<PAGE>

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 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. 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. Changes in interest rates are not
expected to materially impact operations, because the majority of the real
estate mortgages have fixed interest rates, as do all of the inter-company
loans.

     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.

     Two recent developments could have a material impact on the performance of
the Trust. First is the general downturn in the U.S. economy due in large part
to the collapse of the technological sector. This translated into a
significantly softer 2001 summer apartment rental market, particularly in
Florida. Occupancies and collections have been negatively impacted for the last
nine months, and management does not anticipate any improvement in the near
term. The second development arises out of the horrible events of September 11,
2001. While management believes it is still too early to understand how deeply
this event will impact the confidence of Americans and their way of life, it is
likely to result in a more cash conscientious consumer, which could result in
downward pressure on rental rates.

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

     Subject to the foregoing discussion, management believes that the Trust and
the Operating Partnership have the ability to satisfy their cash requirements
for the foreseeable future. However, management of the Trust believes that it
will be necessary to raise additional capital during the next 12 months to make
acquisitions and to meet management's revenue and cash flow goals.

     As part of the Trust's ongoing operations, management is reviewing the
entire portfolio of properties to determine the potential for restructuring or
refinancing various first mortgage loans. Additionally, properties whose recent
performance has materially negatively impacted the Trust's operating results are
being evaluated for possible sale. Certain of these properties have been listed
for sale. The Trust is also in discussions with other apartment owners, and is
exploring business combinations that will bring it economies of scale and the
size it needs for listing its Common Shares on a recognized securities exchange.
Additional size would also give the Company the operating margin necessary to
support its valuable management team that is believed necessary for its
long-term growth.

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

     In February 2002, the Board of Trustees of the Trust received the
preliminary findings of a report prepared by an independent auditing firm in
which the firm opined that certain transactions of the Trust and the Operating
Partnership (including the Alexandria and Riverwalk property investments)
entered into by prior management involved improper conduct. The Board will use
the preliminary findings for discussions with the former Managing Shareholder of
the Trust concerning the transactions and to investigate the rights and
obligations of the Trust and the Operating Partnership in connection therewith.
The ultimate results of the preliminary findings and discussions will be
reported at such time as they become definitive.


                                       59
<PAGE>

ITEM 7. FINANCIAL STATEMENTS



    See Index to Financial Statements.





                                       60
<PAGE>

                               BARON CAPITAL TRUST

                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000




<PAGE>


                               BARON CAPITAL TRUST



                          INDEX TO FINANCIAL STATEMENTS




                                                                      PAGE


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                    F-1


CONSOLIDATED FINANCIAL STATEMENTS

   Balance Sheet                                                      F-2

   Statements of Operations                                           F-3

   Statements of Shareholders' Equity                                 F-4

   Statements of Cash Flows                                           F-5

   Notes to Financial Statements                                      F-6 - F-26


<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, 2001 and the related consolidated
statements of operations, shareholders' equity and cash flows for the years
ended December 31, 2001 and 2000. 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 auditing standards generally accepted
in the United States. 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, 2001, and the consolidated results of their
operations and their cash flows for the years ended December 31, 2001 and 2000,
in conformity with accounting principles generally accepted in the United
States.


                            RACHLIN COHEN & HOLTZ LLP

Miami, Florida
February 14, 2002


                                       F-1
<PAGE>


                               BARON CAPITAL TRUST

                           CONSOLIDATED BALANCE SHEET

                                DECEMBER 31, 2001


<TABLE>
<CAPTION>
                                     ASSETS
Rental Apartments:
<S>                                                                              <C>
   Land                                                                         $  4,986,900
   Rental property held for sale                                                   3,171,564
   Depreciable property                                                           23,968,683
                                                                                  ----------
                                                                                  32,127,147
   Less accumulated depreciation                                                   3,228,396
                                                                                  ----------
                                                                                  28,898,751

Cash and Cash Equivalents                                                          1,426,375
Restricted Cash                                                                      330,279
Receivables from Affiliates                                                        5,783,929
Other Property and Equipment                                                         106,321
Other Assets                                                                         875,673
                                                                                  ----------
                                                                                $ 37,421,329
                                                                                  ==========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Mortgages payable                                                            $ 23,161,025
   Accounts payable and accrued liabilities                                        1,100,426
   Notes payable                                                                   1,852,136
   Payables to affiliates                                                          1,173,240
   Security deposits                                                                 221,911
                                                                                  ----------
         Total liabilities                                                        27,508,738
                                                                                  ----------

Shareholders' Equity:
   Common shares, no par value; 25,000,000 shares authorized; 936,346
      (3,165,104 shares of beneficial interest) shares issued and outstanding     18,950,773
   Deficit                                                                        (8,695,675)
   Distributions                                                                    (342,507)
                                                                                  ----------
         Total shareholders' equity                                                9,912,591
                                                                                  ----------
                                                                                $ 37,421,329
                                                                                  ==========
</TABLE>

                 See notes to consolidated financial statements.

                                       F-2
<PAGE>


<TABLE>
<CAPTION>
                               BARON CAPITAL TRUST

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                                   Year Ended
                                                                                  December 31,
                                                                           -------------------------
                                                                               2001           2000
                                                                               ----           ----
<S>                                                                       <C>            <C>
Revenues:
   Property:
      Rental                                                              $ 5,738,562    $ 4,707,842
      Equity in net loss of unconsolidated partnership                             --       (229,064)
   Interest and other income                                                1,442,443        895,634
                                                                          -----------    -----------
                                                                            7,181,005      5,374,412
                                                                          -----------    -----------

Real Estate Expenses:
   Depreciation                                                             1,105,507        953,754
   Amortization of loan costs                                                 107,809        162,220
   Interest                                                                 1,919,811      1,901,100
   Repairs and maintenance                                                    662,951        632,283
   Personnel                                                                  821,950        680,146
   Property taxes                                                             499,139        456,781
   Property insurance                                                         143,301        101,707
   Utilities                                                                  528,623        421,681
   Other                                                                      483,585        320,280
                                                                          -----------    -----------
                                                                            6,272,677      5,629,952
                                                                          -----------    -----------

Administrative Expenses:
   Personnel, including officer's compensation                                643,305        721,626
   Management, investment and administrative fees, Managing Shareholder            --        332,151
   Professional services                                                      238,165        311,451
   Other                                                                      787,773        318,968
                                                                          -----------    -----------
                                                                            1,669,243      1,684,196
                                                                          -----------    -----------

Loss Before Other Expenses and Extraordinary Item                            (760,915)    (1,939,736)
                                                                          -----------    -----------

Other (Income) Expenses:
   Write-off of related party notes receivable                              1,093,124             --
   Income from loan discount repayment                                       (400,881)            --
   Impairment of investments                                                   65,130        354,544
   Provision (recovery) for loan losses                                      (641,601)       235,599
   Mortgage prepayment penalties                                              827,013             --
   Write-off of loan costs on refinanced loans                                176,769             --
   Loss on sale of investment held for sale                                   210,843        814,471
                                                                          -----------    -----------
                                                                            1,330,397      1,404,614
                                                                          -----------    -----------

Loss Before Extraordinary Item                                             (2,091,312)    (3,344,350)
                                                                          -----------    -----------

Extraordinary Items - Extinguishment of Debt:
   Non-affiliates                                                             104,719             --
   Affiliates                                                               1,267,755             --
   Former chief executive officer                                             111,500             --
                                                                          -----------    -----------
                                                                            1,483,974             --
                                                                          -----------    -----------

Net Loss                                                                  $  (607,338)   $(3,344,350)
                                                                          ===========    ===========

Loss Per Share - Basic and Diluted :
   Before extraordinary item                                              $     (2.19)   $     (4.10)
   Extraordinary item                                                            1.56             --
                                                                          -----------    -----------
   Net loss                                                               $     (0.64)   $     (4.10)
                                                                          ===========    ===========

Weighted Average Number of Common Shares Outstanding                          953,058        816,316
                                                                          ===========    ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       F-3
<PAGE>

<TABLE>
<CAPTION>

                               BARON CAPITAL TRUST

                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                                            Common Shares of
                                                           Beneficial Interest
                                                           -------------------
                                                          Shares         Amount        Deficit     Distributions        Total
                                                          -------        ------        -------     -------------        -----

<S>                                                    <C>          <C>            <C>             <C>             <C>
Balance, December 31, 1999                               675,086    $  6,616,806   $ (4,743,987)   $   (342,507)   $  1,530,312

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

Balance, December 31, 2000                             3,162,559      18,875,273     (8,088,337)       (342,507)     10,444,429
                                                       ---------    ------------   ------------    ------------    ------------

Year Ended December 31, 2001:
   Common shares issued - settlement of debt              25,000          75,500             --              --          75,500
   Conversion of operating partnership units
      for shares of beneficial interest                  (22,455)             --             --              --              --
   Net loss                                                   --              --       (607,338)             --        (607,338)
                                                       ---------    ------------   ------------    ------------    ------------

Balance, December 31, 2001                             3,165,104    $ 18,950,773   $ (8,695,675)   $   (342,507)   $  9,912,591
                                                       =========    ============   ============    ============    ============
</TABLE>

                 See notes to consolidated financial statements.

                                       F-4
<PAGE>


<TABLE>
<CAPTION>
                                                    BARON CAPITAL TRUST

                                           CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                  Year Ended
                                                                                                  December 31,
                                                                                                  -----------
                                                                                               2001          2000
                                                                                               ----          ----
<S>                                                                                       <C>            <C>
Cash Flows from Operating Activities:
   Net loss                                                                               $  (607,338)   $(3,344,350)
   Adjustments to reconcile net loss to net cash and cash
      equivalents (used in) provided by operating activities:
         Impairment of investments                                                             65,130        354,544
         Provision (recovery) for loan losses                                                (641,601)       235,599
         Credit for estimated fair value of services performed by officer                          --        217,000
         Extinguishment of debt                                                            (1,483,974)            --
         Depreciation                                                                       1,143,826        987,754
         Write-off of related party notes receivable                                        1,093,124             --
         Loss on sale of asset held for investment                                            210,854        814,471
         Amortization of loan costs                                                           107,809        162,220
         Write-off of loan costs on refinanced mortgages                                      176,769             --
         Equity in net loss of unconsolidated partnership                                          --        229,064
         (Increase) decrease in operating assets:
            Reimbursed administrative expense receivable                                           --         36,997
            Due from managing shareholder                                                          --         14,783
            Other assets                                                                     (250,090)         8,917
         Increase (decrease) in operating liabilities:
            Accounts payable and accrued liabilities                                         (901,664)       147,888
            Security deposits                                                                  13,505            464
            Accrued interest payable, affiliates                                                   --        289,588
                                                                                          -----------    -----------
               Net cash and cash equivalents (used in) provided by operating activities    (1,073,650)       154,939
                                                                                          -----------    -----------

Cash Flows from Investing Activities:
   Proceeds from the sale of investment held for sale, net                                  3,424,146             --
   Additions to rental apartments                                                            (638,529)      (196,277)
   Purchases of other property and equipment                                                  (38,680)        (4,979)
   Cash distributions from partnerships                                                            --          6,082
   Increase in restricted cash                                                                 29,615         13,841
                                                                                          -----------    -----------
               Net cash and cash equivalents provided by (used in) investing activities     2,776,552       (181,333)
                                                                                          -----------    -----------

Cash Flows from Financing Activities:
   Proceeds from mortgage refinancings                                                      8,095,000             --
   Payments on mortgages payable                                                           (8,474,147)      (503,960)
   Proceeds from sale of common shares of beneficial interest                                      --        248,308
   Payments on notes payable                                                                 (554,862)      (100,000)
   Increase in loans payable to affiliates, net                                               636,574        369,180
                                                                                          -----------    -----------
               Net cash and cash equivalents (used in) provided by financing activities      (297,435)        13,528
                                                                                          -----------    -----------

Net Increase (Decrease) in Cash and Cash Equivalents                                        1,405,467        (12,866)

Cash and Cash Equivalents, Beginning                                                           20,908         33,774
                                                                                          -----------    -----------

Cash and Cash Equivalents, Ending                                                         $ 1,426,375    $    20,908
                                                                                          ===========    ===========

Supplemental Disclosure of Cash Flow Information:
   Cash paid for mortgage and other interest                                              $ 1,847,309    $ 1,738,426
                                                                                          ===========    ===========
</TABLE>

                 See notes to consolidated financial statements.

                                       F-5
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2001 AND 2000



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.

             Senior management of the Trust manages the operations of the Trust
             and the Operating Partnership subject to the supervisory authority
             of the Board of Trustees 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 Board of Trustees 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 24% of the limited partner units of the
             Operating Partnership. The consolidated accounts of the Operating
             Partnership include the accounts of 25 controlled limited
             partnerships that at December 31, 2001 had an indirect equity
             and/or debt interest in 27 apartment communities. Interest in 22 of
             the 25 limited partnerships was acquired as a result of the
             Exchange Offering that was consummated April 7, 2000 (see Note 3).

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

             The minority interest of unitholders in the Operating Partnership
             represents the 757,746 limited partnership units owned by the
             Original Investors of the Operating Partnership (see Note 15), 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 Partnership limited to the $100,000
             contribution. For 2000, the entire balance of the proportionate
             share of the net loss of the Operating Partnership of $577,000 was
             charged to the majority unitholders. For 2001, the minority
             unitholders' proportionate share of the net loss was allocated to
             them. As of December 31, 2001, 757,746 Operating Partnership
             limited partnership units issued to the Original Investors are
             subject to escrow restrictions and 757,746 units are convertible
             into common shares of the Trust, respectively (see Note 15).


                                      F-6
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Concentrations of Credit Risk

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

             Cash

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

             Receivables from Affiliates

                Mortgage notes receivable are comprised mainly of second
                mortgages whose ultimate repayment is subject to the performance
                of the underlying property and timing of repayments. Other
                receivables are comprised of notes, lines of credit and advances
                receivable (see Note 7). The Trust establishes an allowance for
                loan losses when it believes the principal balance and accrued
                interest will not be recovered.

         Real Estate Rental Properties and Depreciation

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

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

                                                Estimated Useful Lives (Years)
                                                ------------------------------
              Building                                        30
              Leasehold improvements                          10
              Furniture and fixtures                           7
              Computer equipment and software                 3-5

         Real Estate Rental Properties and Depreciation

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


                                      F-7
<PAGE>


                               BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         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.

         Restricted Cash

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

         Investments in Partnerships

             The Trust, through the Operating Partnership, accounts for its
             investments in limited partnerships in which it is deemed not to
             have the controlling interest, but has more than a minor limited
             partnership interest, utilizing the equity method of accounting.
             The Operating Partnership's investments in Alexandria Development,
             L.P., which represent a 40% interest at December 31, 2001, is
             accounted for using the equity method (see Note 6).

         Mortgage Notes Receivable - Affiliates

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

         Loan Costs

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


                                      F-8
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Use of Estimates

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

         Reclassifications

             Certain items included in the 2000 consolidated financial
             statements have been reclassified to conform with the 2001
             presentation.

         Income Taxes

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

         Fair Value of Financial Instruments

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

             The fair value of debt instruments has been estimated by using
             discounted cash flow models incorporating discount rates based on
             current market interest rates for similar types of instruments. At
             December 31, 2001, the differences between estimated fair value and
             the carrying value of debt instruments were not material.

         Recent Accounting Pronouncements

             In August 2001, the Financial Accounting Standards Board (the FASB)
             issued Statement of Financial Accounting Standards No. 144,
             "Accounting for the Impairment or Disposal of Long-Lived Assets"
             (SFAS 144), which addresses financial accounting and reporting for
             the impairment or disposal of long-lived assets. SFAS 144
             supersedes Statement No. 121, "Accounting for the Impairment of
             Long-Lived Assets and for Long-Lived Assets to Be Disposed Of", and
             the accounting and reporting provisions of APB Opinion No. 30,
             "Reporting the Results of Operations - Reporting the Effects of
             Disposal of a Segment of a Business, and Extraordinary, Unusual and
             Infrequently Occurring Events and Transactions", for the disposal
             of a segment of a business. SFAS 144 retains the requirement in
             Opinion No.


                                      F-9
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Recent Accounting Pronouncements (Continued)

             30 to report separately discontinued operations and extends that
             reporting to a component of an entity that either has been disposed
             of or is classified as held for sale. The Partnership is required
             and plans to adopt the provisions of SFAS 144 for the quarter
             ending March 31, 2002. The Trust has not determined the impact that
             SFAS 144 will have on its financial statements.

             In June 2001, the FASB issued Statement of Financial Accounting
             Standards (SFAS) No. 143, "Accounting for Asset Retirement
             Obligations". SFAS 143 requires entities to record the fair value
             of a liability for an asset retirement obligation in the period in
             which it is incurred. The statement requires that the amount
             recorded as a liability be capitalized by increasing the carrying
             amount of the related long-lived asset. Subsequent to initial
             measurement, the liability is accreted to the ultimate amount
             anticipated to be paid, and is also adjusted for revisions to the
             timing or amount of estimated cash flows. The capitalized cost is
             depreciated over the useful life of the related asset. Upon
             settlement of the liability, an entity either settles the
             obligation for its recorded amount or incurs a gain or loss upon
             settlement. SFAS 143 will be effective for the Trust's financial
             statements beginning January 1, 2002. The Trust believes that the
             adoption of this statement will not have a significant impact on
             the results of operations or financial position of the Trust.

             In July 2001, the FASB issued SFAS No. 141, "Business
             Combinations", and SFAS No. 142, "Goodwill and Other Intangible
             Assets" which replace Accounting Principles Board Opinion Nos. 16,
             "Business Combinations" and 17, "Intangible Assets", respectively.
             SFAS No. 141 requires that the purchase method of accounting be
             used for all business combinations initiated after June 30, 2001,
             and that the use of the pooling-of-interests method be prohibited.
             SFAS No. 142 changes the accounting for goodwill from an
             amortization method to an impairment-only method. Amortization of
             goodwill, including goodwill recorded in past business
             combinations, will cease upon adoption of SFAS No. 142, which the
             Trust will be required to adopt on January 1, 2002. After December
             31, 2001, goodwill can only be written down upon impairment
             discovered during annual tests for fair value, or discovered during
             tests taken when certain triggering events occur. The Trust
             believes that the adoption of this statement will not have a
             significant impact on the results of operations or financial
             position of the Trust.

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


                                      F-10
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

         Recent Accounting Pronouncements (Continued)

             In June 1999, the Financial Accounting Standards Board issued SFAS
             No. 137, "Accounting for Derivative Instruments and Hedging
             Activities - Deferred 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.
             Adoption of the new standard on January 1, 2001 had no effect on
             the financial statements of the Trust.

NOTE 2.  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 and
         one condominium apartment property. In the Exchange Offering, the
         Operating Partnership issued 2,449,492 registered Operating Partnership
         Units (with an initial assigned value of $24,494,920) in exchange for
         substantially all outstanding units of limited partnership interest
         owned by individual limited partners ("Exchange Limited Partners") in
         23 limited partnerships (the "Exchange Partnerships"), which directly
         or indirectly owned equity and/or debt interests in one or more of 25
         residential apartment properties and one condominium apartment property
         located in the southeast and mid-west United States. Prior to the
         completion of the Exchange Offering, the Exchange Partnerships were
         managed by corporate general partners (the "Corporate General
         Partners"), which were controlled by Gregory K. McGrath, who is a
         founder and former Chief Executive Officer of the Trust and the
         Operating Partnership and a principal unit holder of the Operating
         Partnership.

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


                                      F-11
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 2.  EXCHANGE OFFERING (Continued)

         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 were 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 were owned
         by the Operating Partnership, with the remaining limited partnership
         interests being retained by Exchange Limited Partners who elected not
         to accept the offering or failed to respond to the offering.

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

         In April 2001, the Operating Partnership caused one of the Exchange
         Partnerships to sell its record title interest in one of the Exchange
         Properties, Glen Lake Apartments, a 144-unit residential apartment
         property located in St. Petersburg, Florida. Management of the Trust
         determined to sell the property based on its lack of performance and
         its need for substantial and frequent cash infusions.

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

         The following unaudited pro forma summary presents consolidated
         financial information as if the Exchange Partnerships had been acquired
         effective January 1, 2000. The pro forma amounts include adjustments
         for depreciation as a result of the adjustment to fair value of the
         residential apartment properties and interest associated with the
         related mortgages. The pro forma information does not necessary reflect
         the actual results that would have occurred nor is it necessarily
         indicative of future results of operations of the combined
         partnerships. No pro forma information is presented for 2001 since the
         consolidated financial information of the Exchange Partnerships is
         included in the consolidated statement of operations for 2001.


                                      F-12
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 2.  EXCHANGE OFFERING (Continued)
                                                            2000
                                                            ----
        Total revenues                                 $  6,780,000
        Cost and expenses                                10,234,000
                                                         ----------
        Net loss                                       $ (3,454,000)
                                                        ===========

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

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

NOTE 3.  RENTAL APARTMENTS

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

         In April 2000, pursuant to a registration statement on Form S-4, the
         Operating Partnership completed an exchange offering (the Exchange
         Offering) under which it acquired additional interests in residential
         apartment properties and one condominium apartment property (see Note
         2). In the Exchange Offering, the Operating Partnership issued
         2,449,492 registered Operating Partnership Units in exchange for
         substantially all outstanding units of limited partnership interest
         owned by individual limited partners in 23 limited partnerships which
         directly or indirectly own equity and/or debt interests in one or more
         of 25 residential apartment properties and one condominium apartment
         property (containing an aggregate of 1,602 units) located in the
         southeast and mid-west United States. As noted in Notes 2 and 5, in
         April 2001, the Operating Partnership sold one of the properties
         representing 144 units.

NOTE 4.  RENTAL APARTMENT HELD FOR SALE

         During 2001, the Trust decided to sell two residential apartment
         properties - Stadium Club Apartments, a 60-unit apartment building
         located in Florida and Steeplechase Apartments, a 72-unit apartment
         building located in Indiana. The decision to sell these properties was
         based on the properties' lack of performance and their continuing need
         for cash to operate.

         The Trust expects to sell these properties in 2002. The carrying amount
         of the properties was adjusted to their estimated realizable value at
         December 31, 2001 resulting in a write-down of $65,130.

          Property                                     Carrying Amount
          --------                                     ---------------
          Stadium Club Apartments                        $1,642,000
          Steeplechase Apartments                         1,529,564
                                                          ---------
          Total                                          $3,171,564
                                                          =========


                                      F-13
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 4.  RENTAL APARTMENT HELD FOR SALE (Continued)

         The results of operations of these properties for the year ended
         December 31, 2001 were as follows:

                                         Stadium Club    Steeplechase
                                         ------------    ------------
          Revenue                         $ 298,995       $ 302,095
          Expenses                          516,937         423,238
                                           --------        --------
          Net Loss                        $(217,942)      $(121,142)
                                           ========        ========

NOTE 5.  SALE OF PROPERTY

         On December 7, 2000, the Independent Trustees of the Trust accepted an
         offer to sell Glen Lake Arms Apartments (Glen Lake), a 144-unit
         apartment building located in St. Petersburg, Florida for approximately
         $3,900,000. The decision to sell Glen Lake was based on the property's
         lack of performance and its continuing need for cash to operate. On
         April 30, 2001, the Partnership consummated the sale of Glen Lake
         resulting in a loss on the sale of $210,843.

         The results of operations of Glen Lake for the four months ended April
         30, 2001 were as follows:

          Rental and other income                          $328,816
          Expenses                                          294,300
                                                            -------
             Excess of income over expenses               $  34,516
                                                           ========

NOTE 6.  INVESTMENT IN PARTNERSHIP

         On October 14, 1998, the Operating Partnership acquired an approximate
         12% 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"). An
         affiliate of the Trust sold the partnership interest in the Alexandria
         Property to the Operating Partnership and also formerly served as the
         managing general partner of the Alexandria Property. As of December 31,
         2001, the Operating Partnership owned twenty-six (26) units out of a
         total of sixty-five (65) units of limited partnership interest (40%).

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

         The equity in net loss in Alexandria was approximately $229,000 for
         2000.

         The Alexandria Partnership defaulted on its first mortgage construction
         loan when it matured in December 2000, and the lender has exercised its
         right to accelerate payment of the loan. In December 2001, a Kentucky
         court appointed a receiver to manage the property. The construction


                                      F-14
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 6.  INVESTMENT IN PARTNERSHIP (Continued)

         contractor is owed approximately $890,000 for construction costs,
         penalties and interest. Sigma Renaissance Corporation (an entity
         controlled by a Trustee of the Trust that now controls and manages the
         property) recently filed for bankruptcy protection on behalf of the
         Alexandria Partnership, and is currently negotiating with the lender
         and the construction contractor to address the defaults.

NOTE 7.  RECEIVABLES FROM/TO AFFILIATES

         Mortgage Notes Receivable

             As of December 31, 2001, the Trust held discounted mortgage notes,
             including accrued interest, with a carrying value of $3,079,053,
             net of allowance for loan losses of approximately $1,940,000. The
             total face value plus accrued interest on these notes amounted to
             $7,304,505 at December 31, 2001. The notes accrue interest at
             interest rates ranging from 6% to 12% and are generally paid
             currently to the extent of available cash flows. As of December 31,
             2001, accrued interest relating to these mortgage notes receivables
             amounted to $1,471,900. The notes mature at various dates through
             April 20, 2008. The notes are secured by unrecorded liens upon
             certain real and personal property and are subordinated to first
             mortgages, which in the aggregate amounted to approximately
             $11,500,000 at December 31, 2001.

             The changes in the allowance for loan losses during 2001 and 2000
             was as follows:

                                                        2001             2000
                                                        ----             ----

              Beginning balance                        $2,580,000     $2,344,400
              Provision (recovery) for loan losses       (640,000)       235,600
                                                       ----------     ----------
                 Ending balance                        $1,940,000     $2,580,000
                                                        =========      =========

             During 2001, first mortgages of properties underlying certain
             partnerships were refinanced with a portion of the proceeds
             remitted to the Trust to pay down subordinated notes. As a result
             of the reduction in these subordinated notes, the Trust recognized
             a recovery against the loan loss reserve of $640,000.

         Lines of Credit

             The Trust extends lines of credit to affiliates and is liable under
             lines of credit extended to the Exchange Properties from
             affiliates. All amounts accrue interest at 10% per annum and are
             due on demand. The balance due from affiliates under lines of
             credit was $724,498, with accrued interest of $376,078, as of
             December 31, 2001. Amounts due to affiliates under the lines of
             credit were $225,366, with accrued interest of $31,366, as of
             December 31, 2001.


                                      F-15
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 7.  RECEIVABLES FROM/TO AFFILIATES (Continued)

         Advances To/From

             From time to time, the Trust advances funds to and receives
             advances from affiliates. These transactions are generally less
             than $20,000, non-interest bearing and are due on demand. Advances
             due from affiliates totaled $132,400 as of December 31, 2001.
             Advances due to affiliates totaled $916,508 as of December 31,
             2001.
<TABLE>
<CAPTION>
         Summary of Receivables/Payables - Affiliates:
                                                                     Receivables       Payables

<S>                                                                   <C>            <C>
          Mortgage notes receivable plus accrued interest, net of
             allowance for loan losses of $1,940,000                  $4,550,953     $       --
          Lines of credit                                              1,100,576        257,032
          Advances                                                       132,400        916,508
                                                                      ----------     ----------
             Total                                                    $5,783,929     $1,173,540
                                                                      ==========     ==========
</TABLE>

NOTE 8.  OTHER PROPERTY AND EQUIPMENT

<TABLE>
<CAPTION>
<S>                                                                                    <C>
         Furniture and equipment                                                       $122,941
         Computer equipment and software                                                 77,266
         Leasehold improvements                                                          20,813
                                                                                       --------
                                                                                        221,020
         Less accumulated depreciation                                                  114,699
                                                                                       --------
                                                                                       $106,321
                                                                                       ========
</TABLE>

         Depreciation expense for other property and equipment for the years
         ended December 31, 2001 and 2000 was $38,319 and $34,001, respectively,
         and is included in other administration expenses in the consolidated
         statement of operations.

NOTE 9.  MORTGAGES PAYABLE

         In 1998, the Trust acquired interest in three limited partnerships each
         owning a residential apartment property. In connection with the
         Exchange Offering completed April 7, 2000, the Trust acquired 16
         partnerships that directly owned interests in 15 residential
         properties. Each property had a mortgage that is secured by such
         property. Total mortgage loans on these 18 properties amount to
         $23,161,025 at December 31, 2001. The mortgage loans bear interest at
         rates ranging from 6.5% to 9.5% and mature on various dates through
         December 2028. On February 5 and July 31, 2001, the Partnership
         refinanced the first mortgages on four rental properties (see Note 10).


                                      F-16
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 9.  MORTGAGES PAYABLE (Continued)

         The aggregate maturities of mortgages payable for each of the five
         years subsequent to December 31, 2001 are as follows:

<TABLE>
<CAPTION>
                                             Principal       Interest          Total
         Year ending December 31:
<S>         <C>                              <C>             <C>            <C>
            2002                             $   289,285     $1,606,649     $ 1,895,934
            2003                                 310,649      1,585,284       1,895,933
            2004                                 333,612      1,562,322       1,895,934
            2005                               9,041,030      1,411,247      10,452,276
            2006                               7,046,044        756,050       7,802,094
            2007 and thereafter                6,140,406      1,672,240       7,812,646
                                             -----------      ---------     -----------
               Total                         $23,161,025     $8,593,791     $31,754,816
                                             ===========      =========     ===========
</TABLE>

NOTE 10. MORTGAGE REFINANCING

         On February 5 and July 31, 2001, the Trust refinanced the first
         mortgages on four rental properties. The new information pertaining to
         the mortgages is as follows:

<TABLE>
<CAPTION>
                                                         Interest       Term           Maturity           Monthly
          Property                        Mortgage         Rate       (Years)            Date            Payments
          --------                        --------         ----       -------            ----            --------

<S>                                      <C>               <C>           <C>       <C>                    <C>
          Pineview                       $2,700,000        7.51%         25        February 5, 2011       $19,970
          Heatherwood                     1,900,000        7.51          30        February 5, 2011        13,298
          Eagle Lake                      1,900,000        7.51          25        February 5, 2011        14,053
          Crystal Court I                 1,595,000        7.26          30         July 30, 2011          10,892
</TABLE>

         The Trust received approximately $1,875,000 in proceeds from the
         refinancing of the first mortgages. In connection with the
         refinancings, the Trust paid one-time prepayment penalties of
         approximately $827,000, which is included in other expenses in the
         accompanying consolidated statement of operations.

NOTE 11. NOTES PAYABLE

         The Trust has unsecured notes payable to three entities (controlled by
         a Trustee of the Trust) with annual interest rates ranging from 10% to
         10.4% and is due on demand. As of December 31, 2001, the principal
         balance outstanding on these notes was $1,441,108, with accrued
         interest of $292,201 and accrued maturity premium payment of $118,827,
         totaling $1,852,136.

NOTE 12. EXTINGUISHMENT OF INDEBTEDNESS TO FORMER CHIEF EXECUTIVE
         OFFICER AND AFFILIATES

         In connection with the sale of the Glen Lake property described in Note
         5, the Trust extinguished approximately $1,268,000 of payables due to
         affiliates and $111,500 due to the Trust's former Chief Executive
         Officer. These liabilities were owed by Florida Capital Income Fund IV,
         Ltd.


                                      F-17
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 12. EXTINGUISHMENT OF INDEBTEDNESS TO FORMER CHIEF EXECUTIVE
         OFFICER AND AFFILIATES (Continued)

         (former owner of the Glen Lake property) (one of the Exchange
         Partnerships) to certain affiliates which were owned or controlled by
         Gregory K. McGrath, the Trust's former Chief Executive Officer. These
         amounts are reported as an extraordinary item in the accompanying
         consolidated statement of operations for 2001.

         The Trust also wrote off accrued interest payable of approximately
         $113,000 relating to the extinguished payables due to related parties
         and approximately $23,000 of accounts payable. These amounts were
         recorded as reductions to interest expense and other administrative
         expenses in the accompanying consolidated statement of operations for
         2001.

         During 2001, the Trust entered into a settlement with parties who
         provided legal counsel during the Exchange Offering. This settlement
         resulted in the extinguishment of approximately $105,000 in obligations
         that were previously included in accounts payable. This amount is
         recorded as a reduction of professional services in the accompanying
         consolidated statement of operations for 2001.

NOTE 13. COMMITMENTS AND CONTINGENCIES

         Contract to Purchase Additional Properties

             In September 1998, the Trust entered into an agreement with three
             real estate development companies (Brentwood at Southgate, Ltd.,
             Burlington Residential, Ltd. and The Shoppes at Burlington, Ltd.)
             to acquire two luxury residential apartment properties in the
             development stage upon the completion of construction. The three
             development companies were previously controlled by Gregory K.
             McGrath, a founder and the former Chief Executive Officer of the
             Trust. In September 2001, Mr. McGrath assigned all of the
             outstanding partnership interests in the three partnerships to
             Sigma Renaissance Corporation, a Michigan corporation controlled by
             Jerome S. Rydell, a member of the Board of Trustees of the Trust.
             One of the residential apartment properties has been sold to a
             third party with the Trust's consent. The remaining residential
             property is scheduled to have a total of 396 units, comprised of
             one, two and three bedroom/one or two bathroom apartments.
             Construction of the property (the "Burgundy Hills Property"),
             located in Florence, Kentucky (part of the Cincinnati metropolitan
             area), is expected to be completed by the end of the first quarter
             of 2004.

             In connection with the transaction, the Trust obtained a right of
             first negotiation to purchase the property from the Borrower upon
             completion and a right of first refusal to purchase the property on
             the same terms offered by a third party. The purchase price is
             expected to be approximately $30,000,000. It is contemplated that a
             significant portion of that amount would be covered by first
             mortgage financing. At the current time the Trust does not have
             adequate resources to close on the transaction even if it were
             interested in doing so and it is uncertain whether the Trust will
             have adequate resources to complete the transaction upon completion
             of construction. In addition, as described below, because the owner
             of the first mortgage on the property has assumed control of the
             management of the Borrower and the development of the property, the
             exercisability of the Trust's rights is currently uncertain.


                                      F-18
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 13. COMMITMENTS AND CONTINGENCIES (Continued)

         Contract to Purchase Additional Properties (Continued)

             In connection with the transaction, the Trust (along with Mr.
             McGrath, its former Chief Executive Officer) agreed to co-guarantee
             long-term first mortgage construction financing provided by KeyBank
             National Association ("KeyBank") to Burlington Residential, Ltd.
             ("Borrower"), the owner of the Burgundy Hills Property. As of
             February 14, 2002, approximately $6,478,000 of the first mortgage
             loan had been drawn down. The interest rate on the first mortgage
             loan is KeyBank's prime rate (currently 6.75%) or the LIBOR rate
             plus 2%. The Trust also agreed that, if the Borrower failed to
             comply with the repayment and other obligations under the loan
             documents, KeyBank could require the Trust to buy out the bank's
             position on the entire amount of the loan.

             In September 2000, the Trust received notice from counsel to
             KeyBank that the Borrower had defaulted on its loan for failure to
             pay current interest due and meet certain equity requirements and
             covenants under the loan agreement, adverse changes in the
             financial conditions of the Borrower and the Trust, and the Trust's
             failure to meet certain tangible net worth tests set forth in the
             loan agreements. KeyBank indicated that it was exercising its right
             to accelerate the loan. According to Mr. McGrath, KeyBank agreed to
             forego further action for at least 60 days while the parties
             attempted to reach an arrangement. The extension expired in
             November 2000 and, according to Mr. McGrath, has been extended on a
             month-to-month basis. The Borrower paid down the outstanding
             accrued interest and a portion of the principal and intends to seek
             a new long-term construction facility with another institutional
             lender to replace the first mortgage loan (and the BankOne
             affiliate loan described below). There can be no assurance that
             such financing will be available on satisfactory terms.

             In December 2000, an affiliate of BankOne acquired KeyBank's
             position in the Burgundy Hills first mortgage loan. The loan is
             subject to the same terms and conditions as that of the original
             KeyBank loan. Earlier, the BankOne affiliate had provided
             additional institutional financing in the principal amount of
             $1,576,000 to the Borrower. That loan is secured by a security
             interest in partnership interests in the Borrower. Due to a default
             in payment of interest due, the BankOne affiliate was assigned
             rental payments from the Burgundy Hills Property and took over
             day-to-day management of the property.

             The BankOne affiliate recently sold the two loans to
             Burgundy-Boone, LLC, an Illinois limited liability company,
             according to the latter's counsel. As a result, Burgundy-Boone, LLC
             has assumed control of management of the Borrower and of the
             development of the Burgundy Hills Property.

             The Trust, as guarantor of the first mortgage loan, currently has a
             contingent liability for its full outstanding amount. According to
             counsel for Burgundy-Boone, LLC, as of November 2001, principal and
             interest payments on the first mortgage loan are current. However,
             there can be no assurance that the first mortgage loan will not
             again go into default, in which event Burgundy-Boone, LLC might
             attempt to begin foreclosure proceedings against the Burgundy Hills
             Property in respect of the first mortgage loan.


                                      F-19
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 13. COMMITMENTS AND CONTINGENCIES (Continued)

         Contract to Purchase Additional Properties (Continued)

             Century Construction Inc., the general contractor which performed
             construction services on the Burgundy Hills Property, recently
             filed an action against the Borrower and Mr. McGrath to enforce a
             mechanic's lien on the property in the amount of approximately
             $1,300,000. The contractor also named KeyBank and the BankOne
             affiliate in the action, seeking damages against them on
             allegations of lender's liability.

         Officers' Compensation

             Prior to January 1, 2001, a founder of the Trust and the Operating
             Partnership had agreed to serve as Chief Executive Officer in
             exchange for compensation in the form of Trust common shares or
             Operating Partnership units in an amount not to exceed 25,000
             common shares or units, as applicable, to be determined by the
             Executive Compensation Committee based upon his performance. As of
             December 31, 2000, no Trust common shares or Operating Partnership
             units had been issued to the former Chief Executive Officer as
             compensation. However, in order to reflect all appropriate
             administrative expenses of the Operating Partnership, a provision
             of $217,000 was made in the financial statements for the estimated
             fair value of the services rendered by the former Chief Executive
             Officer for 2000. Effective December 31, 2000, no compensation
             expense was charged for the services provided by the former Chief
             Executive Officer, as these services were minimal to the Trust's
             operations.

             On August 28, 2000, the Trust entered into employment agreements
             with the President and Chief Executive Officer (CEO) and with the
             Chief Financial Officer (CFO) through December 31, 2001. Under the
             terms of the agreement, the Trust through the Operating Partnership
             paid the CEO and the CFO $173,356 and $111,382, respectively, for
             their services in 2001. In addition, the CEO and the CFO received
             $60,000 and $40,000, respectively, as an incentive to remain in the
             employment of the Trust through the term of the agreement. Since
             January 1, 2002, they have served in such capacities without
             employment agreements.

         Underwriting Agreement

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


                                      F-20
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 13. COMMITMENTS AND CONTINGENCIES (Continued)

         Operating Leases

             During 2001, the Operating Partnership executed an operating lease
             for its office facilities. The lease, which expires on June 30,
             2002, requires monthly payments of $1,100. The Operating
             Partnership has the option to renew this lease on a month-to-month
             basis for 24 months commencing at the expiration of the initial
             lease term. All of the terms and conditions of the lease shall
             apply during the renewal term except that the monthly rent shall be
             $1,400 per month for the first 12 renewed months and $1,470 per
             month for the second 12 renewed months. Minimum future lease
             payments through June 30, 2002 are $6,600.

             Rent expense was approximately $35,000 and $42,500 for 2001 and
             2000, respectively.

         Pending Litigation

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

NOTE 14. RELATED PARTY TRANSACTIONS

         Trust Management Agreement

             In 1998, the Trust entered into a Trust Management Agreement with
             the former Managing Shareholder under which the former Managing
             Shareholder was obligated to provide management, administrative and
             investment advisory services to the Trust.

             On February 7, 2001, the Independent Trustees of the Trust and the
             former Managing Shareholder agreed to terminate the agreement
             effective December 31, 2000. At December 31, 2000, the Trust had
             accrued approximately $303,000 that represented all unpaid fees
             earned by the former Managing Shareholder through December 31,
             2000. This amount was paid in 2001. In 2000, the Trust paid an
             aggregate of $333,151.

         Reimbursed Administrative Expenses

             During 2000, the Operating Partnership shared 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 was a former officer of the
             general partner of the Operating Partnership. These administrative
             expenses were allocated as described below, and the allocated
             expenses were reimbursed to the Operating Partnership by these
             other partnerships. The allocation of the costs was determined
             based upon an analysis of those administrative costs directly
             associated


                                      F-21
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 14. RELATED PARTY TRANSACTIONS (Continued)

         Reimbursed Administrative Expenses (Continued)

             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 2000, the Operating Partnership was reimbursed approximately
             $370,000 for administrative expenses, which have been presented as
             reductions of the specific related category of administrative
             expenses in the accompanying consolidated financial statements.

NOTE 15. SHAREHOLDERS' EQUITY

         Cash Offering

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

         Exchange Offering

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

             Of these units, 2,449,492 units were exchanged for units of limited
             partnership interest in 23 limited partnerships (the "Exchange
             Partnerships"), which directly or indirectly owned equity and/or
             mortgage interests in one or more residential apartment properties
             and one condominium apartment property. Prior to the completion of
             the exchange, the Exchange Partnerships were managed by corporate
             general partners who were affiliated with the founders and former
             Chief Executive Officer of the Trust and the Operating Partnership.
             The 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 15. SHAREHOLDERS' EQUITY (Continued)

         Exchange Offering (Continued)

             The number of Units offered in exchange for the limited partnership
             interests in the Exchange Partnerships was based on appraisals
             prepared by qualified and licensed independent appraisal firms for
             each underlying residential apartment property. For purposes of the
             Exchange Offering, each Unit was arbitrarily assigned an initial
             value of $10, which corresponds to the offering price of each Trust
             Common Share that was being offered to the public pursuant to the
             Cash Offering. The value of each Unit and Common Share outstanding
             was substantially identical since Unit holders, including
             recipients of Units in the Exchange Offering, are entitled to
             exchange all or a portion of their Units at any time and from time
             to time for an equivalent number of Trust Common Shares, so long as
             the exchange would not cause the exchanging party to own (taking
             into account certain ownership attribution rules) in excess of 5%
             of the then outstanding shares in the Trust, subject to the Trust's
             right to cash out any holder of Units who requests an exchange and
             subject to certain other exceptions. To facilitate such exchanges
             of Units into Common Shares, 2,500,000 Common Shares (in addition
             to the 2,500,000 Common Shares offered by the Trust in the Cash
             Offering) have been registered with the Commission.

             By virtue of the completion of the Exchange Offering, the Operating
             Partnership acquired equity and/or subordinated mortgage and other
             debt interests in 26 properties (the "Exchange Properties")
             directly or indirectly owned by the 23 Exchange Partnerships. The
             Operating Partnership acquired interests in a particular property
             and/or mortgages by acquiring from limited partners their units of
             limited partnership interest in the respective Exchange
             Partnership. Each of the Exchange Partnerships directly or
             indirectly owned equity and/or mortgage interests in one or more
             properties. As described in Notes 2 and 5, the Operating
             Partnership sold one of the properties. Certain of the Exchange
             Partnerships in which the Operating Partnership owns an interest,
             directly or indirectly own equity interests in 15 properties, which
             consist of an aggregate of 868 residential apartment units
             (comprised of studio, one, two, three and four bedroom units).
             Certain of the Exchange Partnerships in which the Operating
             Partnership owns an interest, directly or indirectly own mortgage
             and other debt interests in 10 properties, which consist of an
             aggregate of 590 existing residential apartment units (studio and
             one and two bedroom units) and 152 condominium apartment units (two
             and three bedroom units) under development. Of the Exchange
             Properties in which the Operating Partnership owns an interest, 20
             properties are located in Florida, three properties in Ohio and one
             property each in Georgia and Indiana. See Note 2 regarding the
             completion of the Exchange Offering on April 7, 2000.

             In connection with the Exchange Offering, 124,903 Trust common
             shares were issued in 2000 as a commission to broker-dealers who
             assisted the Operating Partnership in consummating the Exchange
             Offering. The shares were issued at a value of $10 per share and
             are reflected at a net zero value in the accompanying Statement of
             Shareholders' Equity.


                                      F-23
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 15. SHAREHOLDERS' EQUITY (Continued)

         Operating Partnership Limited Partnership Units

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

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

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


                                      F-24
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 15. SHAREHOLDERS' EQUITY  (Continued)

         Operating Partnership Limited Partnership Units (Continued)

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

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

NOTE 16. NET LOSS PER SHARE

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

         Basic net loss per share equals net loss divided by the weighted
         average shares outstanding during the year. The computation of diluted
         net loss per share that includes dilutive common share equivalents in
         the weighted average shares outstanding has not been presented, as it
         is anti-dilutive in 2001 and 2000.

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

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

          2001                        $  (607,338)        953,058       $ (.64)
                                      -----------        --------       --------

          2000                        $(3,344,350)        816,316       $(4.10)
                                      ===========        ========       ========

         Assuming that the Original Investors had exchanged their limited
         partnership units for an equivalent net amount of 757,746 Common Shares
         in 2001 and 2000, the net loss per share on an as-converted basis would
         have been $(.35) and $(2.12) per share for 2001 and 2000, respectively.


                                      F-25
<PAGE>

                              BARON CAPITAL TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

NOTE 17. SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING
         ACTIVITIES

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

          Land and depreciable property                             $28,723,196
          Mortgage notes receivable, affiliates                       3,292,677
          Receivables and accrued interest, affiliates                3,262,522
          Other assets                                                  848,813
                                                                     ----------
             Total assets                                            36,127,208
                                                                     ----------

          Mortgage payable                                           19,766,015
          Notes payable and accrued interest                          2,320,586
          Payables and accrued interest, affiliates                   1,435,548
          Accounts payable                                              644,266
          Security deposits                                             167,634
                                                                     ----------
             Total liabilities                                       24,334,049
                                                                     ----------
                Equity                                              $11,793,159
                                                                     ==========

         During 2001, the Operating Partnership issued 25,000 units of limited
         partnership interest valued at $75,500 to settle amounts owed to a
         vendor.

NOTE 18. SIGNIFICANT FOURTH QUARTER ADJUSTMENTS

         At December 31, 2001, the Trust had notes receivable due from an
         affiliated partnership amounting to $795,000, plus accrued interest of
         $298,125. During the fourth quarter of 2001, the affiliated partnership
         assigned its interest in the partnership to another entity controlled
         by a Trustee of the Trust. Based on the assignee's financial condition,
         the Trust's Management has determined that collectibility of these
         notes is remote. Accordingly, the Trust wrote off the entire notes
         receivable balance plus accrued interest in the fourth quarter of 2001.

NOTE 19. SUBSEQUENT EVENT

         In February 2002, the Board of Trustees of the Trust received the
         preliminary findings of a report prepared by an independent auditing
         firm in which the firm opined that certain transactions of the Trust
         and the Operating Partnership (including the Alexandria and Riverwalk
         property investments) entered into by prior management involved
         improper conduct. The Board will use the preliminary findings for
         discussions with the former Managing Shareholder of the Trust
         concerning the transactions and to investigate the rights and
         obligations of the Trust and the Operating Partnership in connection
         therewith. The ultimate results of the preliminary findings and
         discussions will be reported at such time as they become definitive.


                                      F-26

<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 members of the Board of Trustees and
executive officers of the Trust and the Operating Partnership and their
respective ages and positions are set forth below. Each of the Trustees other
than Mr. Rydell has served since 1998; Mr. Rydell has served since 2001. The
term of each Trustee is one year. There is no limitation on the number of terms
a Trustee may serve.

<TABLE>
<CAPTION>
Name                      Age         Position
----                      ---         --------

<S>                       <C>         <C>
James H. Bownas           54          Independent Trustee
Peter M. Dickson          52          Independent Trustee
Jerome S. Rydell          56          Trustee
Robert L. Astorino        55          Chief Executive Officer - Trust and Operating Partnership
Mark L. Wilson            55          Chief Financial Officer - Trust and Operating Partnership
</TABLE>


     The senior management of the Trust has discretion in day to day management
and control of the affairs of the Trust and the Operating Partnership, subject
to (i) general supervision and review by the Independent Trustees and the other
members of the Board of Trustees of the Trust and (ii) prior approval authority
of a majority of the Board and/or of a majority of the Independent Trustees in
respect of certain actions of the Trust and the Operating Partnership. The
Declaration of the Trust requires that a majority of the Board of the Trust be
comprised of Independent Trustees. Two of the three current members of the Board
are Independent Trustees. The term as Trustee of each of the current Trustees
expires in May 2002, and each of them has been nominated by the Trust for
re-election at the annual meeting of Shareholders scheduled on May 29, 2002.

     The management of the Trust 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.

     James H. Bownas, an Independent Trustee on the Board of Trustees of the
Trust, has been a principal in Gamble Hartshorn Johnson Co. LPA, a Columbus,
Ohio law firm with a general practice since November 1996. Mr. Bownas's practice
is concentrated in securities, real estate, taxation, corporate and estate
planning. Between January 1996 and November 1996, Mr. Bownas managed his own
legal practice. Between 1989 and January 1996, Mr. Bownas served as General
Counsel, Vice President and Secretary of Lexford, Inc. ("Lexford") (formerly
Cardinal Realty Services, Inc. and before that Cardinal Industries, Inc.), a
publicly traded company headquartered in Reynoldsburg, Ohio which has sponsored
numerous real estate investment limited partnerships. At Lexford, Mr. Bownas
developed significant experience in the syndication of real estate investment
limited partnerships, negotiated the resolution of over $2 billion of creditors'
claims in connection with the bankruptcy reorganization of Cardinal Industries,
Inc., and coordinated the transition of Cardinal Industries, Inc. from a
bankruptcy creditor to a successful publicly traded company. Since 1995, Lexford
has engaged in several arms-length transactions (none of which represented a
material portion of Lexford's assets, liabilities, revenues or expenditures)
with affiliates of Baron Advisors, Inc., the former Managing Shareholder of the
Trust, pursuant to which multi-family real estate was sold to, purchased from
and managed by and for such entities. Mr. Bownas's term as an Independent
Trustee expires in May 2002, and he has been nominated by the Trust for
re-election at the annual meeting of Shareholders scheduled for May 29, 2002.

     Peter M. Dickson, an Independent Trustee on the Board of Trustees of the
Trust, has been managing director of the Guardian Management Company Limited, a
global financial services corporation based in Bermuda, since January 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


                                       61
<PAGE>


1979 and 1985, Mr. Dickson held several positions with Peat, Marwick. Mr.
Dickson's term as an Independent Trustee expires in May 2002, and he has been
nominated by the Trust for re-election at the annual meeting of Shareholders
scheduled for May 29, 2002.

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

     Sigma is also participating in the private offering of units of limited
partnership interest in Baron Lakeside Construction Fund, L.P. ("Baron
Lakeside") and Baron SABH Construction Fund, L.P. ("Baron SABH"). The two
partnerships, sponsored and formerly managed by affiliates of Mr. McGrath (and
now managed by Sigma Renaissance Corporation ("Sigma Renaissance"), of which Mr.
Rydell is a principal), are attempting to raise a total of $4,150,000. In
September 2001, Mr. McGrath assigned all of the outstanding interests in the two
partnerships and their corporate general partners to Sigma Renaissance. The net
proceeds of these offerings will be used to make loans to owner/developers of
residential condominium and apartment development properties to enable them to
pay down first mortgage indebtedness secured by such properties and to cover
outstanding payables owed to general contractors and other vendors of the
projects, construction completion expenses, interest payments prior to repayment
of the loans, working capital, and/or certain administrative expenses. The
owner/developers of the properties to be developed were formerly controlled and
managed by affiliates of Mr. McGrath. In September 2001, Mr. McGrath assigned
all of the outstanding interests in the affiliates to Sigma Renaissance. Sigma
Renaissance will have significant authority in respect of the funding of
construction completion requests from owner/developers; the sale of properties
to be developed; the management of entities which will be involved in the
transactions contemplated in the two offerings; and distributions to limited
partners of Baron Lakeside and Baron SABH.

     Mr. Rydell and other affiliates have also sponsored a number of securities
offerings in both real estate and radio stations. In addition, other affiliated
companies currently manage real estate assets comprised of 1,500 residential
sites and $22 million of land contracts and mortgages in the metropolitan
Detroit area. See also "ITEM 12 - CERTAIN RELATIONS AND RELATED TRANSACTIONS"
below. Mr. Rydell's term as an Independent Trustee expires in May 2002, and he
has been nominated by the Trust for re-election at the annual meeting of
Shareholders scheduled for May 29, 2002.

     Robert L. Astorino has served as Chief Executive Officer of the Trust since
May 2001 and as Chief Executive Officer of the Operating Partnership since May
1998. Between August 2000 and May 2001, he served as Chief Operating Officer of
the Trust. From February 1998 through May 1998, he served as President -
Property of Strategic Management Inc., a real estate management company
affiliated with 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. Mr.
Astorino also serves as a manager of Sigma Renaissance (see "ITEM 12 - CERTAIN
RELATIONS AND RELATED TRANSACTIONS" below).

     Mark L. Wilson was elected Chief Financial Officer of the Trust and the
Operating Partnership in November 1998. Between March 1998 and September 2001,
Mr. Wilson also served as Chief Financial Officer for WaKuL, Inc., a provider of
integrated communications services to owners, property managers and residents of
residential apartment properties. WaKul, Inc. is controlled by Mr. McGrath.
Between 1989 and 1997, Mr. Wilson served as Vice President of Baron Real Estate
Services, Inc., an affiliate of Mr. McGrath. Mr. Wilson was 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, from 1992 through his resignation in March 1996, Mr. Wilson served as
President of The Baron Companies, a registered securities broker-dealer which
was the dealer manager of certain private offerings of limited partnerships
affiliated with Mr. McGrath.

     The Corporate Trustee of the Trust is Barcap Realty Services Group, Inc.
("Barcap"), a Delaware corporation originally formed in July 1997 under the name
Baron Capital Properties, Inc. It is a wholly owned subsidiary of the Trust. The
primary duty of the Corporate Trustee is to operate an office in the State of
Delaware as Delaware law requires that at least one of the trustees of a
Delaware business trust (such as the Trust) have an office in Delaware. Barcap,
as Corporate Trustee of the Trust, will act only at the


                                       62
<PAGE>


direction of the Board of Trustees of the Trust, 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 Board of Trustees. Such expenses are expected to be limited to those
incurred in connection with the operation of its Delaware office. Barcap may in
the future serve as a trustee of other similar entities that may be organized by
the Trust or the Operating Partnership, and will also act as a Taxable REIT
Subsidiary of the Trust, transacting all non-REIT related transactions for the
Trust. The Chief Executive Officer and sole director of Barcap is Robert L.
Astorino. The principal Delaware office of Barcap 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

                               Annual Compensation

<TABLE>
<CAPTION>

                                                                                        Long Term              All Other
     Name and Principal Position          Year         Salary          Bonus           Compensation          Compensation
     ---------------------------          ----         ------          -----           ------------          ------------
<S>                                       <C>      <C>                <C>                   <C>                <C>
Robert L. Astorino, Chief Executive
Officer - Trust and Operating
Partnership                               2001     $173,356           $60,000               --                 $7,385 (1)

Mark L. Wilson, Chief Financial
Officer - Trust and Operating
Partnership                               2001     $111,382           $40,000               --                 $6,575 (2)
</TABLE>

(1)  Company car allowance

(2)  Company Car

     Each Independent Trustee is entitled to be paid an annual fee of $6,000 for
serving in such capacity. In August 2000, the Trust entered into employment
agreements with Mr. Astorino, to serve as President and Chief Operating Officer
of the Trust, and Mr. Wilson, to serve as its Chief Financial Officer, through
December 31, 2001. Under the terms of the agreements, the Trust, through the
Operating Partnership, have paid Mr. Astorino $173,356 and Mr. Wilson $111,382
per annum to serve in such capacities. In addition, Mr. Astorino and Mr. Wilson
received $60,000 and $40,000, respectively, as an incentive payment to remain in
the employment of the Trust through the term of the agreements. Since January 1,
2002, Mr. Astorino and Mr. Wilson have served as the Chief Executive Officer and
the Chief Financial Officer, respectively, of the Trust and the Operating
Partnership without employment agreements.


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, 2001. 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.


                                       63
<PAGE>

<TABLE>
<CAPTION>

       Name, Position and Address of                     Amount and Nature of
             Beneficial Owner                            Beneficial Ownership                        Percentage of Class
             ----------------                            --------------------                        -------------------
<S>                                                           <C>                                           <C>
James H. Bownas
Independent Trustee
1 East Livingston Avenue
Columbus, Ohio  43215                                             --                                          --

Peter M. Dickson
Independent Trustee
33 Church Street
Hamilton, Bermuda  HM 12                                          --                                          --

Jerome S. Rydell
Trustee
c/o Sigma Financial Corporation
4261 Park Road
Ann Arbor, MI 48103                                           97,450 (1)                                    10.1%

Gregory K. McGrath
Principal Unitholder
1340 Clay Street, Suite 3000
Cincinnati, Ohio  45210                                       378,873 (2)                                   28.2%

Robert S. Geiger
Principal Unitholder (3)                                      378,873 (2)                                   28.2%

Robert L. Astorino
Chief Executive Officer-Trust and Operating
Partnership (4)                                               100,000 (2)                                    9.4%

Mark L. Wilson
Chief Operating Officer-Trust and Operating
Partnership (4)                                                   --                                          --

All executive officers and Trustees of the
Trust and Operating Partnership, as a
group (6)                                                     855,206                                       47.9%
</TABLE>

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

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


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<PAGE>


     (3) Mr. Geiger's current address is unknown.

     (4) The address of Mr. Astorino and Mr. Wilson is c/o Baron Capital Trust,
3570 U.S. Highway 98 North, Lakeland, Florida 33809.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     From 1998 through 2001, the Trust directly or indirectly entered into
several transactions described below in which the amount exceeded $60,000 and in
which an executive officer or Trustee of the Trust or the Operating Partnership
had an interest.

     1. The Trust contributed $3,858,240 (1998), $1,379,500 (1999), and $230,118
(2000) of the net proceeds from the Cash Offering to the Operating Partnership
in exchange for 702,076 Operating Partnership Units. The Trust and the Operating
Partnership were co-founded by Gregory K. McGrath and Robert S. Geiger and they
formerly served as the Chief Executive Officer of the Trust and the Operating
Partnership and the Chief Operating Officer of the Operating Partnership,
respectively. They each own individually Operating Partnership Units as
described above in "ITEM 11- SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT."

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

     3. In connection with the formation of the Trust and the Operating
Partnership, Mr. McGrath and Mr. Geiger, the founders of the Trust and the
Operating Partnership, subscribed for 1,202,160 Units in the Operating
Partnership in exchange for a cash payment of $100,000. On May 31, 2000 (the
termination date of the Cash Offering), pursuant to an agreement among Mr.
McGrath, Mr. Geiger, the Trust and the Operating Partnership, each of Mr.
McGrath and Mr. Geiger returned to the Operating Partnership all but 378,873
Units, representing 9.5% of the then outstanding Common Shares, calculated on a
fully diluted basis assuming that all then outstanding Units (other than those
acquired by the Trust) had been exchanged into an equivalent number of Common
Shares. All outstanding Units, including those owned by Mr. McGrath and Mr.
Geiger, are exchangeable into an equivalent number of Common Shares. See "ITEM
11 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT."

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

     5. Described above under "ITEM 6 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION - Results of Operations" are certain transactions involving
Mr. McGrath, certain of his affiliates, and the Trust relating to the Burgundy
Hills Property.

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

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

     Sigma also sponsored and manages certain real estate investment programs
that as of December 31, 2001 are owed a total of approximately $1,852,136 for
loans made to certain Exchange Partnerships controlled by the Operating
Partnership.


                                       65
<PAGE>


     Sigma is also participating in the private offering sale of units of
limited partnership interest in Baron Lakeside Construction Fund, L.P. ("Baron
Lakeside") and Baron SABH Construction Fund, L.P. ("Baron SABH"). The two
partnerships, sponsored and formerly managed by affiliates of Mr. McGrath (and
now managed by Sigma Renaissance Corporation ("Sigma Renaissance"), or which Mr.
Rydell is a principal), are attempting to raise a total of $4,150,000. In
September 2001, Mr. McGrath assigned all of the outstanding interests in the two
partnerships and their corporate general partners to Sigma Renaissance. The net
proceeds of these offerings will be used to make loans to owner/developers of
residential condominium and apartment development properties to enable them to
pay down first mortgage indebtedness secured by such properties and to cover
outstanding payables owed to general contractors and other vendors of the
projects, construction completion expenses, interest payments prior to repayment
of the loans, working capital, and/or certain administrative expenses. The
owner/developers of the properties to be developed were formerly controlled and
managed by affiliates of Mr. McGrath. In September 2001, Mr. McGrath assigned
all of the outstanding interests in the affiliates to Sigma Renaissance.

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

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

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

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

         Documents filed as part of this report:

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

Exhibit Number                Description
----------------------------- -------------------------------------------------

            3.1*              Certificate of Business Trust Registration of the
                              Registrant (incorporated herein by reference to
                              Exhibit 3.1 to the Form SB-2 Registration
                              Statement of Baron Capital Trust filed with the
                              Securities and Exchange Commission on
                              September 5, 1997).
----------------------------- -------------------------------------------------

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

            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).
----------------------------- -------------------------------------------------


                                       66
<PAGE>


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

           10.2*              Form of Indemnification Agreement among the
                              Registrant, Baron Advisors, Inc., and the
                              Registrant's Independent Trustees and officers
                              (included in Sections 3.6 and 3.7 of the Amended
                              and Restated Declaration of Trust referenced above
                              in Exhibit 3.2)
----------------------------- --------------------------------------------------

           10.3*              Warrant Purchase Agreement, dated as of May 15,
                              1998, between the Registrant and Sigma Financial
                              Corporation (incorporated herein by reference to
                              Exhibit 10.4 to Amendment No. 2 to the Form SB-2
                              Registration Statement of Baron Capital Trust
                              filed with the Securities and Exchange Commission
                              on April 24, 1998).
----------------------------- --------------------------------------------------

           10.5*              Form of Subscription Documents (incorporated
                              herein by reference to Exhibit 3.1 to the Form
                              SB-2 Registration Statement of Baron Capital
                              Trust filed with the Securities and Exchange
                              Commission on
                              September 5, 1997).
----------------------------- --------------------------------------------------

           10.6*              Agreement of Limited Partnership of Baron Capital
                              Properties, L.P. dated as of May 15, 1998
                              (incorporated herein by reference to Exhibit 10.6
                              to Amendment No. 3 to the Form SB-2 Registration
                              Statement of Baron Capital Trust filed with the
                              Securities and Exchange Commission on May 15,
                              1998).
----------------------------- --------------------------------------------------

           10.7*              Amended and Restated Security Escrow Agreement
                              dated as of May 15, 1998 among Gregory K.
                              McGrath, Robert S. Geiger, Baron Capital Trust
                              and American Stock and Transfer Company
                              (incorporated herein by reference to Exhibit 10.4
                              to Amendment No. 2 to the Form S-4 Registration
                              Statement of Baron Capital Properties, L.P. filed
                              with the Securities and Exchange Commission on
                              January 29, 1999
                              (Registration No. 333-55753)).
----------------------------- --------------------------------------------------

           10.8*              Founders' Subscription Agreement (incorporated
                              herein by reference to Exhibit 10.5 to Amendment
                              No. 2 to the Form S-4 Registration Statement of
                              Registrant filed with the Securities and Exchange
                              Commission on January 29, 1999).
----------------------------- --------------------------------------------------

           10.9*              First Amendment to Amended and Restated Security
                              Escrow Agreement, dated April 30, 1999
                              (incorporated herein by reference to Exhibit 10.6
                              to Amendment No. 4 to the Form S-4 Registration
                              Statement of Registrant filed with the Securities
                              and Exchange Commission on June 2, 1999).
----------------------------- --------------------------------------------------

           10.10*             Amendment to Founders' Subscription Agreement
                              dated April 30, 1999 (incorporated herein by
                              reference to Exhibit 10.7 to Amendment No. 4 to
                              the Form S-4 Registration Statement of Registrant
                              filed with the Securities and Exchange Commission
                              on June 2, 1999).
----------------------------- --------------------------------------------------

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

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

*    Previously filed.
**   Filed herewith.

                    (b)  Reports on Form 8-K:

                         No reports on Form 8-K were filed during the quarter
                         ended December 31, 2001.


                                       67
<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

March 29, 2002                        By:      /s/ Robert L. Astorino
                                               ----------------------
                                                    Robert L. Astorino
                                                    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.

<TABLE>
<CAPTION>
Signatures                          Title                             Date

<S>                        <C>                                        <C>
/s/ Robert L. Astorino     Chief Executive Officer                    March 29, 2002
----------------------
     Robert L. Astorino    (Principal Executive Officer)
                           Chief Executive Officer of
                           Baron Capital Properties, Inc.
                           (Corporate Trustee)

/s/ Mark L. Wilson         Chief Financial Officer                    March 29, 2002
----------------------
     Mark L. Wilson        (Principal Financial and Accounting
                           Officer)

/s/ James H. Bownas        Trustee                                    March 29, 2002
----------------------
     James H. Bownas

/s/ Peter M. Dickson       Trustee                                    March 29, 2002
----------------------
     Peter M. Dickson
</TABLE>


                                       68