UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-K

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

                 For the fiscal year ended December 31, 1998 or

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

                  For the transition period from       to 
                                                 -----    -----
                           Commission file No. 1-13080

                              GROVE PROPERTY TRUST
             (Exact name of registrant as specified in its charter)

         MARYLAND                                     06-1391084
(State or other jurisdiction
 of incorporation or organization)       (I.R.S. Employer Identification No.)

    598 ASYLUM AVENUE, HARTFORD, CONNECTICUT                  06105
    (Address of Principal Executive Offices)                (Zip Code)

                                 (860) 246-1126
                (Issuer's Telephone Number, including area code)


      Securities registered pursuant to Section 12(b) of the Exchange Act:

         Title of Each Class:         Name of Each Exchange on Which Registered:
         --------------------         ------------------------------------------
Common Shares of Beneficial Interest,       American Stock Exchange, Inc.
           $.01 par value

      Securities registered pursuant to Section 12(g) of the Exchange Act:
                                      NONE

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section  13 or 15(d) of the  Securities  Exchange  Act during the
preceeding  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:

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not 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-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market  value of voting and  non-voting  common  equity  held by
non-affiliates of the registrant as of February 28, 1999 was $ 73,179,581.

The number of Common Shares of Beneficial  Interest  outstanding  as of February
28, 1999 was 8,639,659.

                      DOCUMENTS INCORPORATED BY REFERENCE:
      Definitive proxy statement for 1999 Annual Meeting of Shareholders -
                             Part III of Form 10-K



<PAGE>



                              GROVE PROPERTY TRUST
                                TABLE OF CONTENTS
                           ANNUAL REPORT ON FORM 10-K
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>

ITEM                                                                                    PAGE
----                                                                                    ----
                                     PART I

<S>                                                                                       <C>
  1.  Business                                                                            2
      Recent Developments                                                                 2
      Growth Strategies                                                                   3
      Apartment Communities                                                               5
      Property Table                                                                      6
      Insurance                                                                           8
      Regulation                                                                          8
      Environmental Matters                                                               9
      Employees                                                                          10

  2.  Properties                                                                         10

  3.  Legal Proceedings                                                                  12

  4.  Submission of Matters to a Vote of Security Holders                                12

                                     PART II

  5.  Market for Registrant's Common Equity and Related Stockholder Matters              12

  6.  Selected Financial Data                                                            15

  7.  Management's  Discussion  and Analysis of Financial  Condition
      and Results of 16 Operations

 7a.  Market Risk and Risk Management Policies                                           21

  8.  Financial Statements and Supplementary Data                                        21

  9.  Changes in and Disagreements with Accountants on Accounting and Financial          21
      Disclosure

                                    PART III

 10.  Directors and Executive Officers of the Registrant                                 21

 11.  Executive Compensation                                                             21

 12.  Security Ownership of Certain Beneficial Owners and Management                     21

 13.  Certain Relationships and Related Transactions                                     21

                                     PART IV

 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K                   21

</TABLE>




                                      -1-
<PAGE>








PART 1

ITEM 1.  BUSINESS

THE COMPANY

Grove Property Trust, a Maryland real estate  investment trust (the "Company" or
"Grove") is a self-managed and  self-administered  real estate  investment trust
("REIT")  that is  engaged in the  acquisition,  repositioning,  management  and
operation  of  mid-priced  and  subsidized   multifamily  and  specialty  retail
properties in the Northeastern  United States. The Company is a fully integrated
real  estate   organization   with  in-house   acquisition,   repositioning  and
renovation, financing, marketing, leasing and property management expertise.

As of March 15,  1999,  Grove  owned  interests  in and  operated  61  Apartment
Communities containing a total of 6,526 units in Connecticut,  Massachusetts and
Rhode  Island and 4  specialty  retail  properties  in  Massachusetts  and Maine
containing  an aggregate of  approximately  118,700  rentable  square feet.  The
Apartment   Communities  are  mid-priced  and  subsidized  apartment  properties
consisting  primarily of two- and three-story  buildings in landscaped settings.
The Apartment  Communities  are well located  within their markets and appeal to
middle  income and  moderate  income  residents  who are  generally  "renters by
necessity", with the exception of the Boston suburban properties where residents
are renters by choice in many instances.

Grove's  predecessors  commenced  operations in 1980. The Company  completed its
initial  public  offering  in 1994  with  the  acquisition  of  three  apartment
properties.  At that  time,  affiliates  of  Grove  owned  additional  apartment
properties  and other real estate  assets  outside of the Company and  conducted
management  and  acquisition  activities  through  entities that were also owned
outside of the  Company.  In 1996,  management  began to  undertake  a number of
strategic initiatives intended to maximize shareholder value. In March 1997, the
Company  completed the  following:  (i) the creation of an Umbrella  Partnership
REIT (an "UPREIT")  structure by forming Grove  Operating,  L.P. (the "Operating
Partnership") to facilitate the consolidating  transactions  described below and
to provide potential sellers with a mechanism to defer their tax liability; (ii)
the  acquisition  through the Operating  Partnership  of 20 properties  owned by
affiliates of Grove; (iii) the acquisition of the property management assets and
related liabilities of Grove Property Services Limited Partnership  ("GPS"), the
entity that managed the  properties  owned by Grove as well as the 20 properties
owned by affiliates of Grove;  (iv) a $30 million private  placement  (3,333,333
shares at $9.00 per share) of equity  securities  to  investors  that  included,
among others,  four investment  funds managed by Morgan Stanley Group,  Inc. and
the Oregon Public Employees Retirement Fund and (v) the closing of a $25 million
Credit  Facility  and  a $15  million  term  loan  facility  (collectively,  the
"Consolidation Transactions").

In November  1997,  the  Company  completed a public  offering  underwritten  by
Salomon Smith Barney and  co-managed  by Lehman  Brothers.  Simultaneously,  the
Company sold additional shares directly to certain  investors.  The Company sold
an  aggregate of 4,500,000  shares at a public  offering  price per share of $10
7/8.

On  November  24,  1997,  the date of the  closing of the  offering,  the yearly
dividend  was  increased  to $0.68 per  Common  Share.  The  proceeds  from this
offering were primarily used to reduce the then outstanding corporate debt.

In April 1998, the Operating  Partnership  entered into a new two-year Revolving
Credit  Facility  (the "1998  Credit  Facility")  with its bank and  retired the
three-year  Revolving Credit Facility with a bank that was entered into in March
1997 (the "Original  Revolving Credit  Facility").  The new 1998 Credit Facility
increased  the  availability  of the  credit  line to $50.0  million  from $25.0
million and converted the line to an unsecured line from a secured line.

On June 1, 1998, the Company  obtained a $63.0 million ten-year term loan with a
lender.  The net  proceeds  of the loan  were  used to repay an  existing  $15.0
million loan,  acquire two properties in East  Providence for $17.0 million (see
Note 2), pay down $27.0  million of the 1998 Credit  Facility and the  remaining
amount of  approximately  $3.0 million was deposited in working capital reserves
or used for transaction  costs.  Payments of interest only are due under the new
$63.0  million loan at an effective  fixed  interest  rate of 6.71% and the loan
matures in June 2008. As of December 31, 1998,  the Company's  weighted  average
interest  rate on its  long-term  debt is  approximately  7.75% and its weighted
average maturity is approximately 11.2 years.

During 1998, the Company  purchased 3,605  apartments  units and a 23,325 square
foot retail property for a total of approximately $171 million.

In January 1999, the indicated yearly dividend was increased to $0.72 per Common
Share.

As of December 31, 1998, the Company's assets were approximately  $327.1 million
and its debt to total market capitalization ratio was approximately 57.4%.

The  Company  operates  in  three  industry  segments:  residential,  subsidized
residential and retail. Certain financial data on a segment basis is included in
Note 16 to the consolidated financial statements , included elsewhere, herein.






                                      -2-
<PAGE>




THE OPERATING PARTNERSHIP

The Operating  Partnership  was formed to act as the vehicle for the acquisition
of properties.  Grove is the sole general  partner of the Operating  Partnership
and thereby controls the Operating Partnership. Using the Operating Partnership,
the Company is able to acquire  properties  in exchange  for Common Units of the
Operating  Partnership  ("Common Units" or "OP Units"),  which represent limited
partnership  interests in the Operating  Partnership.  The  recipients of Common
Units are  restricted  from  transferring  such Common Units for a period of one
year from the acquisition  date. The Common Units are redeemable after such time
for cash  (based  on the fair  market  value of an  equivalent  number of Common
Shares at the time of such redemption) or, at the Company's  option,  for Common
Shares of the Company on a one-for-one basis,  subject to certain  anti-dilution
adjustments and exceptions.  While the holders of Common Units determine whether
they want to redeem Common Units,  the Company  decides if the redemption  price
will be paid in cash or in Common Shares.  With the Operating  Partnership,  the
Company  believes  it is able to offer  attractive  purchase  terms to owners of
properties who have little or no tax basis remaining in such properties. In many
cases,  the immediate  tax liability  incurred by such owners upon a transfer of
such properties would be significant if the purchase price were paid in cash. By
utilizing the Operating Partnership  structure,  the Company can make payment in
Common Units,  thereby  deferring all or a portion of an owner's  federal income
tax  liability.  During 1998,  the Operating  Partnership  issued  approximately
1,000,000  Common Units in conjunction  with  acquisition of 20 properties  with
approximately 2,200 apartments.  At December 31, 1998, Grove owned approximately
69.6% of the total  partnership  interests,  including the sole general  partner
interest,  in the  Operating  Partnership,  consisting  of Grove's  ownership of
8,639,659 Common Units.

BUSINESS OBJECTIVES AND GROWTH STRATEGIES

The  Company's  current  long-term  objectives  are; (i)  acquiring  and,  where
appropriate,  repositioning and renovating under-managed  multifamily properties
at  significant  discounts  to  replacement  costs and at returns  that  enhance
shareholder value; (ii) aggressively managing its portfolio to increase revenues
and reduce operating costs; (iii)  consistently  providing quality service and a
desirable living environment to all of its residents. A variety of factors, many
of which are  beyond  the  Company's  control,  may  prevent  the  Company  from
achieving these  objectives.  In addition,  future  developments  and events may
cause the  Company  to  redefine  its  objectives  either by  modifying  current
objectives or by identifying additional ones.

ACQUISITIONS.  The  Company's  primary  growth  strategy  has  been  to  acquire
under-managed,  mid-priced  apartment  properties  in  the  Northeastern  United
States.  Grove  purchased $115 million of Residential  property,  $49 million of
Subsidized  Residential property,  and $7 million of Commercial property in 1998
and expects to devote  substantial  management  time in 1999  integrating  these
properties  into its  portfolio  rather than  aggressively  pursuing  additional
property acquisitions. Grove believes that opportunities for acquisitions in the
Northeastern  United  States are  attractive  because  the  region is  generally
characterized  by: (i) limited new construction  due to significant  barriers to
entry resulting from high construction costs, limited land availability,  strict
zoning laws and extended permitting processes; (ii) a limited number of publicly
traded  companies  focusing  on the  acquisition  of  under-managed,  mid-priced
multifamily   communities;   (iii)   highly   fragmented   markets   with   many
small-to-medium sized family owned companies that own older apartment properties
in which the owners are  looking to sell with  minimal  tax impact and (iv) many
older apartment properties where maintenance and improvements have been deferred
and where the Company believes  selective capital  improvements and professional
management may create opportunities for increased rents.

When evaluating  potential  acquisitions,  the following factors are among those
the Company considers: (i) the demographic  characteristics and resident profile
of the neighborhood; (ii) the age and quality of the property; (iii) the current
and  projected  cash flow of the property and the ability to increase  cash flow
through  return-oriented  capital  improvements;  (iv) the potential for capital
appreciation of the property;  (v) the terms of leases,  including the potential
for rent  increases;  (vi) the  potential  for  economic  growth and the tax and
regulatory  environment of the community in which the property is located; (vii)
the  occupancy of and demand for  properties of a similar type in the market and
(viii)   competition  from  existing   properties  and  the  potential  for  the
construction of new properties in the area.

The Company's  acquisitions of all Apartment Communities have ranged from single
communities in the $3 million range (88 apartments) to a $105 million  portfolio
that totaled 2,160 units (the McNeil Portfolio).

REPOSITIONING AND RENOVATION.  The Company evaluates,  repositions and renovates
all acquired properties as appropriate. Subsidized residential properties in the
portfolio receive necessary renovations as required. Repositioning of subsidized
residential  assets may occur upon  partial  conversion  to market  rates.  When
pursuing  an  acquisition,   members  of  the  Company's  in-house  acquisition,
development and property management teams work together in evaluating  potential
renovation and repositioning strategies and budgets.  Additionally,  the Company
reviews its portfolio to determine where opportunities exist to make incremental
capital improvements that meet its targeted returns on cost. Typical renovations
include replacing carpets, appliances,  kitchen cabinets, counter tops, bathroom
fixtures and vanities as well as upgrading  landscaping,  adding fitness centers
and community  rooms,  repaving  existing  parking spaces and adding  additional
parking spaces.




                                      -3-
<PAGE>





FINANCING STRATEGIES

The Company intends to maintain a debt-to-total  market  capitalization ratio of
60% or less. At December 31, 1998, the Company had debt totaling  $196.4 million
and a ratio of debt-to-total market  capitalization of approximately 57.4% based
on the  closing  price of the  Company's  Common  Shares on the  American  Stock
Exchange of $11.75 and assuming conversion of all OP Units. The weighted average
interest  rate on the  Company's  mortgage  debt as of  December  31,  1998  was
approximately  7.75% and the weighted  average maturity was  approximately  11.2
years.

REVOLVING CREDIT FACILITY

In March 1997,  the Operating  Partnership  entered into the Original  Revolving
Credit Facility with a bank,  guaranteed by the Company for up to $25.0 million.
Borrowings under the Original  Revolving Credit Facility were  collateralized by
thirteen  properties and interest was payable monthly at a floating rate of 1.5%
above the 30, 60, or 90-day LIBOR rate.

In April 1998, the Operating  Partnership  entered into the 1998 Credit Facility
with its bank and retired the Original  Revolving Credit Facility.  The new 1998
Credit Facility  increased the  availability of the credit line to $50.0 million
from $25.0 million and  converted  the line to an unsecured  line from a secured
line. The 1998 Credit Facility bears interest payable monthly at a floating rate
of 1.5% above the 30, 60, or 90-day  LIBOR  rate.  The 1998  Credit  Facility is
available  to  fund  future  property  acquisitions  and up to $5.0  million  is
available  to fund working  capital  needs.  As of December  31, 1998,  the 1998
Credit  Facility had $34.25 million  outstanding.  The  outstanding  credit line
balance was used primarily for the acquisition of properties.

POLICIES WITH RESPECT TO CERTAIN ACTIVITIES

GENERAL. The following is a discussion of certain current investments, financing
and other  practices of the Company.  These  practices may be amended or revised
from time to time without a vote of the Company's shareholders,  except that the
Company  cannot  change  its policy of holding  its  assets and  conducting  its
business  principally  through the Operating  Partnership without the consent of
the  holders of Common  Units as  provided  in the  Agreement  of the  Operating
Partnership.  No assurance  can be given that the Company's  objectives  will be
attained or that the value of the Company will not decrease.

INVESTMENT  OBJECTIVES AND PRACTICES.  The Company's  investment objective is to
provide  quarterly  distribution of a portion of cash available for distribution
and to achieve  long-term  capital  appreciation  through increases in cash flow
from  operations,  reinvestment  of  retained  cash and growth of the  Company's
property portfolio through accretive  acquisitions and strategic return oriented
repositioning capital improvements.  The Company's practice is to acquire assets
primarily for generation of current income and appreciation.

The Company may  purchase or lease  income-producing  multifamily,  mixed-use or
specialty  retail  properties for long-term  investment,  expand and improve the
properties  acquired,  or sell  such  properties,  in  whole  or in  part,  when
circumstances  warrant.  Any financing or indebtedness  secured by the Company's
properties  will have a priority over the Common Shares in the event of a forced
sale or upon liquidation of any property in the Company's portfolio which serves
as such security.

While the Company has emphasized  equity real estate  investments in multifamily
properties,  it may, at the discretion of the Board,  invest in specialty retail
or  mixed-use  buildings,  equity  real  estate  investments  in other  types of
properties,  mortgages (including participating or convertible mortgages), stock
of other REIT's and other real estate interests.  The Company does not currently
intend to invest in mortgages or stock of other  REIT's.  The  investment by the
Company in  securities of other REIT's,  other  concerns  engaged in real estate
activities or other issues is subject to the percentage of ownership limitations
and gross income tests necessary for REIT qualification.

DISPOSITION.  The  Company  will  periodically  review  the total  assets in the
Company's  portfolio.  The Company may dispose of some of its properties,  based
upon management's strategic review of its total portfolio.

FINANCING PRACTICES.  The Company expects to continue to maintain a conservative
debt to total market  capitalization ratio of 60% or less. Such ratio represents
total debt of the  Company  as a  percentage  of the market  value of the Common
Shares  (assuming the exchange of all Common Units for Common Shares) plus total
debt of the Company.  The Company's  Third Amended and Restated  Declaration  of
Trust, as amended (the "Charter"),  and Bylaws, however, do not limit the amount
or percentage of indebtedness that the Company may incur. In addition, from time
to time, the Company may modify its debt practice in light of changing  economic
conditions,  relative  costs of debt and equity  capital,  market  values of its
properties,  general  conditions  in the market for debt and equity  securities,
fluctuations  in the market price of the Common Shares,  growth and  acquisition
opportunities  and other  factors.  Accordingly,  the  Company  may  increase or
decrease its debt to total market capitalization above or below 60%.

OTHER.  The  Company  intends to operate in a manner that will not subject it to
regulation under the Investment Company Act of 1940. The Company does not intend
(i) to invest in the  securities  of other issuers for the purpose of exercising
control over such issuer;  (ii) to  underwrite  securities  of other  issuers or
(iii) to trade actively in loans or other investments.






                                      -4-
<PAGE>




THE APARTMENT COMMUNITIES

The  Company at March 15, 1999 owned  interests  in and  operated  61  Apartment
Communities  containing a total of 6,526 units.  The Apartment  Communities  are
mid-priced and subsidized  apartment  properties that consist  primarily of two-
and three-story buildings in landscaped settings.  The Apartment Communities are
well  located  within  their  markets and appeal to middle  income and  moderate
income residents who are generally "renters by necessity", with the exception of
the Boston  suburban  properties  where  residents are renters by choice in many
instances. The Apartment Communities are located in the following states:

<TABLE>
<CAPTION>

                             Number of                                                Percentage of
                             ---------                                                -------------
                             Apartment        Number of       Number of Subsidized        Total
                             ---------        ---------       --------------------        -----
State                       Communities    Residential Units    Residential Units     Apartment Units
-----                       -----------    -----------------    -----------------     ---------------
<S>                               <C>            <C>                      <C>                <C>
Connecticut                       29             2,875                    0                  44%
Massachusetts                     27             1,642                1,231                  44%
Rhode Island                       5               778                    0                  12%
                               -----             -----                -----                 ----
Totals as of March 1999           61             5,295                1,231                 100%
                               =====             =====                =====                 ====
</TABLE>


Of the current 61  Apartment  Communities,  32 have 100 units or more,  with the
largest having 416 units and the smallest  having 18 units.  Thirteen  Apartment
Communities   totaling  1,231  units  are  subsidized   under  various  programs
administered by the U.S.  Department of Housing and Urban Development ("HUD") or
the Massachusetts  Housing Finance Authority  ("MHFA").  The average size of the
Apartment  Communities  is  approximately  107 units.  Of the 6,526 units in the
Apartment  Communities,  240 units or 3.7% are studios, 2,728 units or 41.9% are
one bedrooms, 3,302 units or 50.6% are two bedrooms, 242 units or 3.7% are three
bedrooms  and 4 units or 0.1%  are  four  bedrooms.  The  Apartment  Communities
contain an aggregate of 6,382,760  million  rentable square feet with an average
unit size of 978 square feet. For the twelve months ended December 31, 1998, the
Apartment  Communities  had an average  economic  occupancy rate of 96.0% and an
average monthly rental rate of $758 per unit.





                                      -5-
<PAGE>



<TABLE>
<CAPTION>

                                                PROPERTY TABLE
                                                                                                             Average Monthly
                                                                                                             ---------------
                                                                                       Average Economic        Rental Rate
                                                                                       ----------------        -----------
                                                                                       Occupancy Rate (1)      Per Unit (2)
                                                                                       ------------------      ------------
                                                                                
                                                                              Average    Year      Year      Year      Year
                                    Percentage   Number    Year     Year       Sq. Ft.   Ended     Ended     Ended     Ended
     Property           Town/City   Ownership   of Units   Built  Renovated   Per Unit  12/31/97  12/31/98  12/31/97  12/31/98
     --------           ---------   ---------   --------   -----  ---------   --------  --------  --------  --------  --------

Connecticut
-----------
<S>                    <C>               <C>       <C>     <C>       <C>         <C>      <C>       <C>       <C>       <C> 
208-210 Main St (3)    Manchester        100%      28      1969      1988        929      95.8%     95.7%     $780      $809
Arbor Commons (3)      Ellington         100%      28      1975      1988        780      96.6%     95.4%      695       713
Avon Place             Avon               99%     156      1973      1995      1,448      98.3%     99.0%      867       914
Barons Apartments      Southington       100%      54      1970      1994        900      95.8%     90.0%      710       742
Bradford Apartments    Newington          91%      64      1964      1989        894      96.6%     94.7%      696       714
Briar Knoll Apts       Vernon            100%     150      1986       n/a        867         -      94.6%        -       645
(4)(5)                                                                      
Brooksyde Apts (4)     West Hartford     100%      80      1945      1997        800      96.5%     97.6%      684       727
Burgundy Studios       Middletown        100%     102      1973      1996        443      97.2%     95.7%      436       446
Cambridge Estates      Norwich           100%      92      1977      1990        939      97.7%     91.9%      737       756
Colonial Village       Plainville        100%     104      1968      1989        981      97.1%     92.2%      747       780
Dogwood Hill           Hamden            100%      46      1971      1993      1,330      97.5%     96.5%      743       766
Summit & Birch Hill    Farmington        100%     184      1967      1996        937      96.8%     97.5%      785       823
Fox Hill Apartments    Enfield            97%     168      1974      1991        796      93.9%     96.2%      667       684
Fox Hill Commons       Vernon            100%      74      1965      1989        849      94.5%     94.6%      710       736
Greenfield Village     Rocky Hill        100%     131      1965      1997        735         -      92.9%        -       690
(4)(5)                                                                      
Hamden Centre          Hamden            100%      65      1968      1993        873      95.1%     94.3%      655       676
High Meadow (4)(6)     Ellington         100%     100      1975       n/a        691      93.4%     95.4%      595       599
Hilltop (4)(5)         Norwich           100%     120      1987       n/a        986         -      88.4%        -       661
Glastonbury Center     Glastonbury       100%     104      1962      1989        961      90.8%     96.7%      801       832
Loomis Manor           West Hartford      91%      43      1948      1990      1,138      99.5%     94.8%      848       882
Ocean Reef             New London         97%     163      1962      1995        829      94.4%     89.1%      650       667
Park Place West        West Hartford     100%      63      1961      1989        861      97.5%     95.6%      671       687
Pinney Brook (4)(5)    Ellington         100%      34      1968       n/a        882         -       n/a         -       n/a
Parkwood (4)           East Haven        100%     102      1975       n/a        857         -      96.6%        -       620
Sandalwood             New London         97%      39      1977      1996        517      97.6%     95.1%      464       481
Ribbon Mill (4)(5)     Manchester        100%     104      1908       n/a      1,221         -      94.4%        -       681
River's Bend           Windsor           100%     358      1973      1996      1,038      96.0%     97.4%      752       778
Westwynd Apts          West Hartford      91%      46      1969      1990        901      97.2%     95.7%      659       673
Woodbridge             Newington         100%      73      1968      1991        792      99.2%     97.0%      724       741
                                                                             
Massachusetts                                                                
-------------                                                                
929 House (4)          Cambridge         100%     127      1975       n/a        752         -      98.8%        -     1,075
Abington Grove (4)     Abington          100%      90      1968       n/a        867         -      92.8%        -       686
Cedar Glen (4) (7)     Reading           100%     114      1980       n/a        931         -      99.7%        -     1,023
Chestnut Glen (4)      Abington          100%     130      1983       n/a      1,192         -      98.2%        -     1,051
(7)                                                                         
Coachlight Village     Agawam            100%      88      1967      1994        655         -      97.4%        -       556
(4)                                                                         
Conway Court (4)       Roslindale        100%      28      1920       n/a        839         -      91.5%        -       449
(7)                                                                         
Dean Estates           Taunton           100%      58      1984       n/a      1,014      97.5%     96.1%      687       705
Four Winds             Fall River        100%     168      1987      1996      1,089      95.2%     95.3%      692       725
Glen Grove (4) (7)     Wellesley         100%     125      1979       n/a      1,294         -      99.4%        -     1,043
Glen Meadow (4)        Franklin          100%     288      1971       n/a      1,017         -      93.9%        -       464
Gosnold Grove (4)      East Falmouth     100%      33      1978       n/a        796         -      96.8%        -       843
(7)                                                                         
Highland Glen (4)      Westwood          100%     180      1979       n/a      1,250         -       n/a         -       n/a
(7)                                                                         
Longfellow Glen        Sudbury           100%     120      1984       n/a        905         -      95.8%        -     1,130
(4) (7)                                                                     
Nehoiden Glen (4)      Needham           100%      61      1978       n/a       951          -      99.0%        -     1,048
(7)                                                                          
Noonan Glen (4) (7)    Winchester        100%      18      1983       n/a       997          -      99.0%        -     1,022
Norton Glen (4) (7)    Norton            100%     150      1983       n/a     1,100          -      93.2%        -     1,055
Old Mill Glen (4) (7)  Maynard           100%      50      1983       n/a     1,120          -      92.7%        -     1,215
Phillips Park (4)      Wellesley         100%      49      1988       n/a     1,245          -     102.5%        -     1,351
Rockingham Glen (4)    West Roxbury      100%     143      1974       n/a     1,480          -      96.1%        -       933
Security Manor         Westfield          89%      63      1971      1988     1,150       99.8%     99.0%      584       601
Sturbridge Meadows     Sturbridge        100%     104      1985      1998     1,208          -      93.5%        -       609
(4)                                                                         
Summerhill Glen        Maynard           100%     120      1980       n/a       801          -      94.8%        -       426
(4) (7)                                                                     
Van Deene Manor (3)    West               89%     109      1970      1990       664       99.3%     96.8%      618       634
                       Springfield                                          
Village Arms (4) (5)   Acton             100%     123      1973      1998       732          -      95.1%        -       777
Webster Green (4)      Needham           100%      76      1985       n/a     1,342          -     100.8%        -     1,308
Westwood Glen (4)      Westwood          100%     156      1972       n/a       817          -      94.2%        -     1,020
Wilkins Glen (4) (7)   Medfield          100%     102      1975       n/a     1,249          -     104.5%        -       547
                                                                             
Rhode Island                                                                 
------------                                                                 
Dean Estates II        Cranston           97%      48      1970      1994     1,170       96.5%     96.9%      701       714
Royale                 Cranston           97%      76      1976      1993     1,151       91.7%     97.4%      700       724
Tanglewood (4)(5)      West Warwick      100%     176      1973      1998     1,042          -      96.3%        -       647
Winchester Park (4)    East Providence   100%     416      1972      1998       881          -      94.5%        -       558
Winchester Wood (4)    East Providence   100%      62      1989      1998     1,330          -      98.2%        -       934
                                              -------                      -------------------------------------------------
     Total/Weighted Average                     6,526                           978       96.1%     96.0%     $702      $758
                                              =======                      =================================================
     Same Community Weighted Average (4)                                                  96.4%     95.8%     $706      $731
                                                                           =================================================
</TABLE>

                                              (NOTES ON FOLLOWING PAGE)




                                      -6-
<PAGE>





(1)  Average  economic  occupancy rate is derived by dividing;  actual collected
     rental income by gross  potential  rental income.  Gross  potential  rental
     income  includes  vacancy  losses and bad debt,  but does not include model
     expenses or employee  concessions or discounts.  
(2)  Average  monthly  rental  rate  per  unit is  derived  by  dividing;  gross
     potential rental income by total number of leasable units.
(3)  The following  Apartment  Communities  contain  additional space,  which is
     rented to commercial tenants:


Apartment Communities         Commercial Sq. Ft.
---------------------         ------------------
208-210 Main St.                    9,597
Arbor Commons                       4,016
Van Deene Manor                     1,630
                                   ------
Total                              15,243
                                   ======


(4)  The same community weighted average amounts represent the average occupancy
     and rental  rates for the 27  Apartment  Communities  owned by Grove or its
     affiliated  predecessors  for the years 1996,  1997 and 1998. 34 properties
     were purchased by Grove or its affiliated predecessors during or subsequent
     to such periods and have been excluded from the same community amounts. The
     following sets forth the acquisition dates for such Apartment Communities:

<TABLE>
<CAPTION>

Apartment Communities     Acquisition Date     Apartment Communities     Acquisition Date
---------------------     ----------------     ---------------------     ----------------
<S>                            <C>             <C>                            <C>
Brooksyde                      Oct-96          Chestnut Glen                  Oct-98
Greenfield Village             Jul-97          Conway Court                   Oct-98
High Meadow                    Oct-97          Glen Grove                     Oct-98
Pinney Brook                   Dec-97          Glen Meadow                    Oct-98
Briar Knoll                    Dec-97          Gosnold Grove                  Oct-98
Hill Top                       Dec-97          Longfellow Glen                Oct-98
Ribbon Mill                    Dec-97          Nehoiden Glen                  Oct-98
Village Arms                   Dec-97          Noonan Glen                    Oct-98
Tanglewood                     Jan-98          Norton Glen                    Oct-98
Coachlight Village             Apr-98          Old Mill Glen                  Oct-98
Winchester Park                Jun-98          Phillips Park                  Oct-98
Winchester Woods               Jun-98          Summerhill Glen                Oct-98
Sturbridge Meadows             Aug-98          Webster Green                  Oct-98
Parkwood                       Aug-98          Westwood Glen                  Oct-98
929 House                      Oct-98          Wilkins Glen                   Oct-98
Abington Grove                 Oct-98          Rockingham Glen                Nov-98
Cedar Glen                     Oct-98          Highland Glen                  Dec-98
</TABLE>


(5)  These seven properties were purchased from  non-affiliated  parties in 1997
     or 1998, as noted in note 4 above.  Information on these  properties is not
     available for the entirety of the periods  covered in the above table.  (6)
     High Meadow was purchased in October 1997 from a non-affiliated  party. (7)
     These thirteen properties are subsidized residential properties.
(6)  High Meadow was purchased in October 1997 from a non-affiliated party.
(7)  These thirteen properties are subsidized residential properties.

THE RETAIL PROPERTIES

Although the  Company's  principal  focus is the  acquisition  and  ownership of
apartment  communities,  it owns and may in the  future  acquire  mixed-use  and
specialty retail properties. The Company currently owns 4 retail properties. One
of these properties is a community shopping center in Longmeadow, Massachusetts,
that contains  approximately  79,000  rentable  square feet of retail and office
space. The shopping center, which was originally  constructed by an unaffiliated
owner in 1962 and  subsequently  expanded in 1978, was purchased by an affiliate
of the Company in 1994 and  renovated  and  retenanted  by management at various
times from 1994 through 1998. For the year ended December 31, 1998, the shopping
center had an average  annual base rental rate of $13.56 per square foot and was
99.3 % leased. One of these properties is a shopping center in Freeport,  Maine,
that contains  approximately  23,300 rentable  square feet of retail space.  The
shopping center was originally constructed by an unaffiliated owner in 1985. For
the year ended December 31, 1998, the shopping center had an average annual base
rental of $22.92 per square foot and was 100% leased.

The other two retail  properties  are specialty  retail  properties,  which were
acquired from an affiliate of the Company on October 31, 1997.  These properties
are in the historic  district of Edgartown,  Massachusetts.  The two  properties
were  originally  constructed in the 1800's.  The first  building,  known as the
Wharf  Building,  contains  approximately  11,000  rentable square feet, and was
renovated by the previous affiliated owner in 1996. As of December 31, 1998, the
Wharf  Building had an average  annual rental rate of $29.28 per square foot and
was 100 % leased. The second building,  the Cornerblock,  contains approximately
5,400 rentable  square feet and was  substantially  renovated by an unaffiliated
predecessor  owner in 1988.  For the twelve months ended  December 31, 1998, the
Cornerblock  had an average annual rental rate of $32.52 per square foot and was
98.0% leased.

PROPERTY MANAGEMENT

Grove manages its portfolio  through its staff of approximately 242 professional
and  support  personnel  and  approximately  33  part-time  support   personnel,
including  the Chief  Operating  Officer and regional  property  managers at the
corporate  level and property  managers,  service  technicians,  leasing agents,
porters and  landscapers at the property  level.  The Chief  Operating  Officer,
regional property



                                      -7-
<PAGE>




managers and on-site personnel are supported by 30 accounting and administrative
employees.

During 1996, 1997 and 1998, the Company  experienced  average resident retention
rates of 61%, 62% and 68%,  respectively.  The  management  division  implements
on-site management programs,  accounting systems, marketing systems and resident
quality control and retention  procedures.  On-site  property  management  teams
perform leasing and rent collection  functions and coordinate resident services.
The Company uses newspaper advertisements,  resident referrals, apartment guides
and the Internet to market and advertise the Apartment Communities.  The Company
supplements  its  marketing  and  advertising   effort  with   point-of-purchase
materials and well-maintained  properties with strong curb appeal. The Company's
marketing personnel market the Apartment Communities on a continual basis rather
than  waiting  until  vacancies  occur.  The Company does not need to market its
subidized residential  properties due to the fact these properties have resident
waiting lists. In addition, the Company does not market its retail properties.

On-site   management  is  assisted  by  the  regional  managers  and  accounting
department  personnel.  Regional managers monitor  performance  criteria at each
Apartment  Community,  and the  accounting  division  audits and  monitors  each
Apartment Community's financial records.

Prior  to  entering  into   commercial   leases,   Grove   conducts   background
investigations and credit checks of potential commercial tenants.

Prior to entering into  residential  and subsidized  residential  leases,  Grove
conducts  background  investigations  of potential  residents,  including credit
checks, prior landlord references and employer verifications.  Substantially all
of the apartments in the Apartment  Communities  are rented pursuant to standard
twelve-month leases, which facilitate uniform lease administration by helping to
standardize rent collections, security deposit dispositions,  evictions, repairs
and  renewals.  The Company  typically  requires  residents to provide  security
deposits  equal to one month's  rent.  In addition,  the Company  manages  lease
expirations to ensure that vacancies occur on a staggered basis.

The Company's marketing and leasing procedures are designed to ensure compliance
with all federal, state and local laws and regulations.  Underwriting guidelines
for  prospective  residents  comply  with FHAA and ADA (both as  defined  below)
regulations and are designed to stabilize cash flows. Approximately 13 Apartment
Communities  are subsidized  under various  programs  administered by HUD or the
MHFA.

INSURANCE

Grove carries comprehensive liability, fire, flood (where required) and extended
coverage  and  rental  loss  insurance  on  all of its  properties  with  policy
specifications,  insured limits and deductibles  customarily carried for similar
properties.  There are,  however,  certain  types of losses  which may be either
uninsurable  or  not  economically  insurable,  such  as  those  resulting  from
earthquakes,  floods,  tidal waves,  explosion of water pipes,  nuclear hazards,
wars, civil disturbances and environmental matters.

COMPETITION

All of the  Apartment  Communities  are located in developed  areas that include
other apartment communities. The number of competitive apartment properties in a
particular area could have a material  effect on the Company's  ability to lease
apartment  units or at any newly  acquired  properties  and on the rental  rates
charged. There are numerous real estate companies,  including those operating in
the markets in which the Company's  properties  are located,  which compete with
the Company in seeking properties for acquisition and for tenants to occupy such
properties.  The Company may compete with companies that have greater  resources
than the Company.  Further, the availability of single-family housing especially
with lower than normal mortgage rates and other forms of multifamily residential
properties,  such as manufactured housing  communities,  provide alternatives to
existing and potential residents of apartment communities.

REGULATION

GENERAL.  Multifamily  apartment properties and retail properties are subject to
various laws,  ordinances and  regulations,  including  regulations  relating to
recreational  facilities  such as  swimming  pools,  activity  centers and other
common areas.

AMERICANS WITH DISABILITIES ACT. The Company's properties 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" (each as
defined by the ADA). Compliance with the ADA could require removal of structural
barriers to handicapped  access in certain public areas of properties where such
removal is readily achievable.  The ADA does not, however,  consider residential
properties,  such as  multifamily  properties,  to be public  accommodations  or
commercial facilities, except to the extent portions of such facilities, such as
a leasing office,  are open to the public.  Noncompliance  with ADA requirements
and applicable state laws could result in imposition of fines or an award of



                                      -8-
<PAGE>




damages to private  litigants.  The Company may incur additional costs to comply
with such laws.

FAIR HOUSING  AMENDMENTS  ACT OF 1988.  The Fair Housing  Amendments Act of 1988
(the "FHAA") requires multifamily properties first occupied after March 13, 1990
to be accessible to the handicapped. Noncompliance with the FHAA could result in
the imposition of fines or an award of damages to private litigants.

RENT  CONTROL  LEGISLATION.  State  and  local  rent  control  laws  in  certain
jurisdictions  limit a property owner's ability to increase rents and to recover
increases  in  operating  expenses  and  costs  of  capital   improvements  from
residents. Enactment of such laws has been considered from time to time in other
jurisdictions,  although such laws have not been adopted in the jurisdictions in
which the Company currently operates. The regulations of HUD and MHFA applicable
to the Company's subsidized  residential  properties limit the Company's ability
to increase rents at these properties.

ENVIRONMENTAL MATTERS

Under various federal, state and local laws, ordinances and regulations relating
to the protection of the environment, a current or previous owner or operator of
real estate may be held  liable for the costs of  investigations  or  performing
removal or  remediation  of certain  hazardous or toxic  substances or petroleum
products  released on, under,  in, emitting from, or located on, under or in the
property and may be held liable to a  governmental  entity or third  parties for
damages,  investigation,  remediation,  or  other  costs  associated  with  such
contamination.  These laws often impose liability  without regard to whether the
owner was  responsible  for, or even knew of, the presence of such  hazardous or
toxic substances or petroleum products.  The costs of investigation,  removal or
remediation  of such  substances  may be  substantial,  and the presence of such
substances may adversely affect the owner's ability to rent or sell the property
or to borrow using such  property as  collateral  and may expose it to liability
resulting from any release of or exposure to such substances.  Moreover, certain
loan documents  provide for recourse  liability in connection  with hazardous or
toxic substances. Persons who arrange for the disposal or treatment of hazardous
or toxic  substances  at  another  location  may also be liable for the costs of
removal or remediation of such substances at the disposal or treatment facility,
whether  or not such  facility  is owned or  operated  by such  person.  Certain
environmental laws impose liability for release of asbestos containing materials
into the air, and third  parties may also seek recovery from owners or operators
of real  properties  for personal  injury  associated  with asbestos  containing
materials  and other  hazardous or toxic  substances or petroleum  products.  In
connection with the ownership  (direct or indirect),  operation,  management and
development  of real  properties,  the  Company  may be  considered  an owner or
operator of such properties regulated by such laws, ordinances,  and regulations
relating to the  protection  of the  environment  or as having  arranged for the
off-site disposal or treatment of hazardous or toxic substances and,  therefore,
if  environmental  contamination  were to be found at such  real  properties  or
off-site  locations,  the  Company  could be  potentially  liable for removal or
remediation   costs,   as  well  as  certain  other  related  costs,   including
governmental penalties and injuries to persons and property.

Federal  legislation  requires  owners  and  landlords  of  residential  housing
constructed  prior to 1978 to disclose to potential  residents or  purchasers of
the properties any known  lead-paint  hazards and will impose treble damages for
failure to give the required  notice.  The  existence of  lead-based  paint in a
property may result in lead poisoning in children  residing  therein if chips or
particles of lead-based  paint are ingested,  and the Company may be held liable
under state laws for any injuries  caused by ingestion  of  lead-based  paint by
children  living  at  the  Apartment  Communities  or any  apartment  properties
acquired by the Company in the future.

All of the Properties  were subject to Phase I (or an update of a prior Phase I)
or similar environmental assessments by independent  environmental  consultants.
Phase I  assessments  are  intended to discover  information  regarding,  and to
evaluate the  environmental  condition of, the surveyed property and surrounding
properties.  Phase I assessments generally include a historical review, a public
records review, a preliminary investigation of the surveyed site and surrounding
properties, and preparation and issuance of a written report, but do not include
soil  sampling  or  subsurface  investigations.  The  environmental  assessments
identify  underground  storage  tanks at the  following  properties:  Tanglewood
Village, Glen Grove, Conway Court, Nehoiden Glen, Chestnut Glen, Abington Grove,
Cedar Glen,  Noonan Glen,  Longfellow Glen and Rockingham  Glen. The underground
storage tank at  Tanglewood  Village has been  removed and  replaced  with a new
unit,  Rockingham  Glen's storage tank was removed by the previous owner and the
property has been fully  converted to natural gas  eliminating  the need for any
future  underground  storage  tanks.  The remaining new  properties are awaiting
contracts for future removal and replacement of their underground storage tanks.

Various  environmental  laws and regulations also control how certain activities
can or must be conducted at the Company's  properties.  Such requirements govern
maintenance   activities,   renovation  projects  and  other  worker  operations
involving  asbestos or  lead-based  paint.  They also may govern air  emissions,
wastewater  discharges,  waste  management  or  similar  activities  related  to
operation of the Company's properties.






                                      -9-
<PAGE>





Under  various laws and  regulations,  owners and operators of  underground  and
aboveground  storage  tanks  containing  petroleum are obligated to meet certain
construction  and  operating  standards.  In  addition,  such  tank  owners  and
operators are responsible for remediating any contamination  caused by petroleum
released from such tanks.

Grove's  environmental  assessments  of its  properties  have not  revealed  any
environmental  liability that the Company believes would have a material adverse
effect on its business, assets or results of operations taken as a whole, nor is
the Company aware of any such material environmental liability.  Nonetheless, it
is  possible  that the  Company's  assessments  do not reveal all  environmental
liabilities  or that  material  environmental  liabilities  exist of  which  the
Company is unaware.  Moreover,  there can be no assurance  that (i) future laws,
ordinances or regulations or new interpretations of existing laws or regulations
will not  impose  any  material  environmental  liability  or (ii)  the  current
environmental  condition  of the  Company's  properties  will not be affected by
tenants, by the condition of land or operations in the vicinity of the Company's
properties (such as the presence of leaking  underground  storage tanks),  or by
third   parties   unrelated  to  the  Company  so  as  to  impose  any  material
environmental liability.

EMPLOYEES

As of February 15, 1999 the Company employed approximately 280 persons including
part time employees and its executive officers, none of whom is represented by a
labor union. The Company considers its relations with its employees to be good.

ITEM 2.  PROPERTIES

The information  concerning the Company's  properties contained in Item 1 hereof
under the captions "The Apartment  Communities"  and "The Retail  Properties" is
incorporated herein by reference.

Certain  of the  Company's  properties  secure  mortgage  indebtedness  on  such
property as summarized by the following table.




                                      -10-
<PAGE>


<TABLE>
<CAPTION>

                        Principal Amount                 Total Book Value
                         Outstanding at     Fair Value   Principal Amount     Contractual
Name of Property        December 31, 1998   Step Up (3)    Outstanding       Interest Rate     Maturity Date
----------------        -----------------   -----------  ----------------    -------------     -------------
                          (amounts in
                           thousands)

<S>                        <C>                              <C>                 <C>   <C>        <C> 
Avonplace                  $  6,342                         $  6,432            6.71% (1)        May 2008
Brooksyde                     1,937                            1,937            6.71% (1)        May 2008
Coachlight Village            2,097                            2,097            6.71% (1)        May 2008
Colonial Village              3,584                            3,584            6.71% (1)        May 2008
Dean Estates II               1,225                            1,225            6.71% (1)        May 2008
Four Winds                    6,005                            6,005            6.71% (1)        May 2008
Fox Hill Apartments           5,554                            5,554            6.71% (1)        May 2008
River's Bend                 12,389                           12,389            6.71% (1)        May 2008
Summitt & Birch Hill          7,286                            7,286            6.71% (1)        May 2008
Royale                        2,018                            2,018            6.71% (1)        May 2008
Barons Apartments             1,229                            1,229            7.25%           June 2013
Bradford Apartments           1,958                            1,958            6.71% (1)        May 2008
Burgundy Studios              1,822                            1,822            6.71% (1)        May 2008
Cambridge Estates             4,299                            4,299            7.04% (2)      January 2006
Parkwood                      2,882                            2,882            7.88%          October 2031
Sturbridge Meadows            2,412                            2,412           10.08%          November 2019
Fox Hill Commons              2,196                            2,196            6.71% (1)         May 2008
Glastonbury Center            4,358                            4,358            8.33%          December 2003
Loomis Manor                  1,768                            1,768            6.71% (1)         May 2008
Ocean Reef                    2,292                            2,292            7.49%         September 2005
Winchester Woods              2,376                            2,376            7.05%          December 2005
Woodbridge                    2,304                            2,304            6.71% (1)         May 2008
Dean Estates                  1,989                            1,989            7.09%          December 2000
Longmeadow Shops              4,000                            4,000            7.00%          December 2007
Security Manor                1,444                            1,444            6.71% (1)         May 2008
Van Deene Manor               3,071                            3,071            6.71% (1)         May 2008
Glen Meadow                   2,884                            2,884            6.19%            March 2013
Westwood Glen                 3,468                            3,468            6.19%            April 2013
Rockingham Glen               4,193         $  222             4,415            7.46%            April 2018
Wilkins Glen                  1,964            433             2,397            8.96%            April 2016
Summerhill                    2,209            295             2,504            7.46%            April 2018
Abington Grove                1,922            158             2,080           10.05%           November 2001
Nehoiden Glen                 1,142            133             1,275            8.20%             May 2008
Gosnold Grove                   770             41               811            7.69%            April 2016
Glen Grove                    3,338            351             3,689            8.20%           October 2009
Conway Court                    515             78               593            7.90%            April 2016
Norton Glen                   5,275          2,049             7,324           12.47%            June 2013
Cedar Glen                    3,274            354             3,628            8.40%           October 2009
Highland Glen                 6,518            404             6,922            7.50%          September 2022
Chestnut Glen                 5,221            925             6,146            9.70%           December 2011
Noonan Glen                     661            127               788            9.75%             June 2011
Old Mill Glen                 2,209            884             3,093           12.26%           October 2012
Longfellow Glen               5,304          2,189             7,493           12.26%            June 2013
Webster Green                 4,572            131             4,703            7.55%          December 2005
929 House                     5,354            394             5,748            7.40%           April 2018
Phillips Park                 3,090            253             3,343            8.39%          November 2006
                           -----------------------------------------
  Total                    $152,720         $9,421          $162,141
                           =========================================
</TABLE>




                                      -11-
<PAGE>



(1)  These seventeen  properties secure the Company's $ 63 million interest only
     first mortgage note. The effective interest rate on this note is 6.71%.
(2)  This loan is secured by three properties,  Cambridge Estates,  Dogwood, and
     Hamden Center.
(3)  These amounts represent the mortgage step up required by generally accepted
     accounting  principles  to state  the debt at fair  value  assuming  a 7.0%
     interest rate.

Reference  is  also  made  to  Note 5 to the  Company's  Consolidated  Financial
Statements for the year ended December 31, 1998 included elsewhere herein.

ITEM 3.  LEGAL PROCEEDINGS

The  Company is not  presently  involved  in any legal  proceedings,  other than
litigation arising in the ordinary course of business, some of which is expected
to be covered by  liability  insurance  and all of which,  collectively,  is not
expected to have a material adverse effect on the business,  financial condition
or results of operations of the Company.

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

The Company did not submit any matters to a vote of security  holders during the
fourth quarter of the fiscal year ended December 31, 1998.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's Common Shares of Beneficial Interest,  $.01 par value (the "Common
Shares") are listed on the American Stock  Exchange (the "AMEX")  (Regular List)
under the symbol "GVE." Prior to November 1997, the Common Shares were listed on
the Emerging Company Marketplace of the AMEX. The following table sets forth for
the periods  indicated  the high and low sale prices as reported on the AMEX and
the  dividends  declared  and paid by the Company on each Common  Share for each
such period.  All 1997 prices and  dividends  have been  adjusted to reflect the
share split and share dividend paid by the Company in March 1997.


    1998 Quarter Ending
    -------------------
                                                                Dividend Per
                                  High             Low          Common Share
                                  ----             ---          ------------
      March 31, 1998            $ 10.938        $ 10.125           $ 0.17
      June 30, 1998             $ 11.250        $ 10.000           $ 0.17
      September 30, 1998        $ 10.875        $  8.750           $ 0.17
      December 31, 1998         $ 11.750        $  9.250           $ 0.17


    1997 Quarter Ending
    -------------------
                                                                Dividend Per
                                  High             Low          Common Share
                                  ----             ---          ------------
      March 31, 1997            $ 10.371        $  7.719         $ 0.1558 (1)
      June 30, 1997             $ 11.250        $  9.625         $ 0.1890 (2)
      September 30, 1997        $ 12.375        $ 10.625         $ 0.1575
      December 31, 1997         $ 12.000        $ 10.062         $ 0.1620
                                             

(1)  Represents  the  dividend  declared  and paid for the period  beginning  on
     January 1, 1997 and ending on March 14, 1997, the date of the  consummation
     of the Consolidation Transactions.
(2)  Represents the dividend declared and paid for the period beginning on March
     15, 1997 and ending June 30, 1997.





                                      -12-
<PAGE>






The Company made no sales of Common Shares  during 1996,  1997 or 1998 that were
not  registered  under the  Securities  Act of 1933,  except for sales for which
information has been previously  included in a Quarterly  Report on Form 10-Q or
Form 10-QSB.

EQUITY OFFERINGS AND OP UNIT ISSUANCES

In March 1997, the Company  completed a private  offering of 3,333,333 of Common
Shares at $9.00 per share and received net proceeds of approximately $27 million
in connection therewith.

In March 1997, the Company, through the Operating Partnership,  issued 2,114,439
OP  Units at $9.00  per OP Unit in  exchange  for  partnership  interests  in 20
properties  owned by  affiliates  of the  Company  and the  assets  and  related
liabilities of GPS, the entity that managed the Company's properties.  The total
value of the OP Units at the time of  issuance  for the above  transactions  was
approximately $19 million.

In June 1997, the Company, through the Operating Partnership,  issued 420,183 OP
Units  at  $10.00  per OP  Unit  in  exchange  for  partnership  interests  in 3
properties  owned by affiliates of the Company.  The total value of the OP Units
at the time of  issuance  for the  above  transactions  was  approximately  $4.2
million.

In  September  1997,  the Company,  through the  Operating  Partnership,  issued
325,836 OP Units at $10.50 per OP Unit in exchange for partnership  interests in
3 properties owned by affiliates of the Company. The total value of the OP Units
at the time of  issuance  for the  above  transactions  was  approximately  $3.4
million.

In October 1997, the Company, through the Operating Partnership,  issued 143,334
OP Units at  $10.50  per OP Unit in  exchange  for  partnership  interests  in 2
properties  owned by affiliates of the Company.  The total value of the OP Units
at the  time of  issuance  for the  above  transaction  was  approximately  $1.5
million.

In  November  1997,  the  Company  completed  a  registered  public  offering of
3,141,475  Common  Shares and a  concurrent  offering  to certain  institutional
investors of 1,358,525  Common Shares both at $10.875 per share and received net
proceeds of approximately $45.2 million in connection therewith.

In April 1998, the Company,  through the Operating Partnership,  issued 5,818 OP
Units  at  $10.50  per OP Unit in  exchange  for  partnership  interests  in one
property  owned by an affiliate of the Company.  The total value of the OP Units
at the time of  issuance  for the  above  transaction  was  approximately  $0.06
million.

From  April to  December  1998,  252,153 OP Units  were  redeemed  for cash at a
weighted average cost of $10.26 per OP Unit.

From July to December  1998,  35,307 OP Units were  exchanged  for the Company's
Common  Shares on a  one-for-one  basis.  The offer and sale of these shares was
registered on the Company's Registration Statement on Form S-3 (no. 333-48551).

From September to December 1998,  304,630 Common Shares were  repurchased by the
Company at a weighted average cost of $9.79 per Common Share.

In September 1998, the Company issued 63,153 Common Shares to Executive Officers
under the 1996  Share  Incentive  Plan.  The offer and sale of these  shares was
registered on the Company's Registration Statement on Form S-8 (no. 333-53653).

In October 1998, the Company, through the Operating Partnership,  issued 845,569
OP  Units at $9.82  per OP Unit in  exchange  for  partnership  interests  in 17
properties  owned by an unaffiliated  party.  The total value of the OP Units at
the time of issuance for the above transaction was  approximately  $8.3 million.
In  addition,   on  October  31,  1998,  the  Company,   through  the  Operating
Partnership,  issued  73,440  OP Units at  $10.33  per OP Unit in  exchange  for
partnership  interests in a property owned by an unaffiliated  third party.  The
total value of the OP Units at the time of  issuance  for this  transaction  was
approximately $0.8 million.

In November 1998,  the Company sold 392,000 Common Shares  directly to Executive
Officers of the Company at a price of $ 10.25 per share (the then current market
price per share).

In November 1998, the Company, through the Operating Partnership, issued 104,525
OP Units at  $10.40  per OP Unit in  exchange  for  partnership  interests  in a
property owned by an unaffiliated  third party.  The total value of the OP Units
at the  time of  issuance  for the  above  transaction  was  approximately  $1.1
million.




                                      -13-
<PAGE>




In January 1999, effective December 31, 1998, the Company, through the Operating
Partnership  issued  23,091  OP  Units at  $11.40  per OP Unit in  exchange  for
partnership  interest in a property owned by an  unaffiliated  third party.  The
total  value of the OP Units at the time of issuance  for the above  transaction
was approximately $0.3 million.

Except as otherwise stated above, all of the transactions referred to above were
not  registered  under the  Securities  Act of 1933 in reliance on the exemption
contained in Rule 506  thereunder  on the basis that each of the  purchasers  in
such transaction was an accredited investor.

DIVIDENDS

During 1998, the Company declared  dividends totaling $0.68 per Common Share, or
approximately  63% of its Funds from  Operations  during the year. For 1997, the
Company declared dividends totaling $0.66 per Common Share, or approximately 63%
of its Funds from  Operations  during the year.  The payment of dividends by the
Company will be at the discretion of the Board of Trust Managers and will depend
on  numerous  factors,  including  the  actual  cash  flow of the  Company,  its
financial condition, capital requirements,  the annual distribution requirements
under the REIT  provisions  of the Code and such other factors that the Board of
Trust Managers deems relevant.

Distributions  by the  Company  to the  extent of its  current  and  accumulated
earnings and profits for federal  income tax purposes  generally will be taxable
to shareholders as ordinary dividend income.  Distributions in excess of current
and  accumulated  earnings and profits  (return of capital) will be treated as a
non-taxable  reduction  of a  shareholder's  basis in the  Common  Shares to the
extent thereof,  and thereafter as taxable gain. Dividends that are treated as a
reduction of a shareholder's  basis in its Common Shares will have the effect of
deferring  taxation  until  the  sale  of  such  shareholder's   Common  Shares.
Approximately 13.83% of the $0.68 dividends declared for 1998 represented return
of capital.  None of the $0.66 of  dividends  declared for 1997,  represented  a
return of capital.

HOLDERS

The approximate number of holders of record of the Common Shares on February 28,
1999 was 99.




                                      -14-
<PAGE>


<TABLE>
<CAPTION>

ITEM 6.        SELECTED FINANCIAL DATA
                                                                Company                    Predecessor (1) 
                                                   ----------------------------------------------------------
                                                       Years Ended December 31,      6/24/94         1/1/94
                                                                                        to              to
                                                    1998     1997    1996    1995    12/31/94        6/23/94
                                                   ----------------------------------------------------------
                                                    (In thousands, except per share data and
                                                                Apartment Data)
OPERATING INFORMATION:
Revenues:
  <S>                                              <C>      <C>       <C>     <C>     <C>              <C>   
  Rental income                                    $ 37,994 $ 17,111  $2,046  $1,287  $   641          $  574
  Property and management                               477      518       -       -        -               -
  Interest and other                                    361      309      36      30       13               9
                                                   ----------------------------------------------------------
      Total revenues                                 38,832   17,938   2,082   1,317      654             583
                                                   ----------------------------------------------------------
Expenses:
  Property operating and maintenance                 13,433    6,078     656     406      208             235
  Real estate taxes                                   3,798    1,770     208     149       76              71
  Related party management fees                           -       22     109      67       33              33
  Interest expense                                    6,791    2,741     394      85       45             173
  Non-recurring acquisition expense (2)               5,550        -       -       -        -               -
  Depreciation and amortization                       6,167    2,701     387     216      117             102
  General and administrative                          2,002      908      67      56       16               -
                                                                                                            
                                                   ----------------------------------------------------------
      Total expenses                                 37,741   14,220   1,821     979      495             614
                                                   ----------------------------------------------------------
Income (loss) before minority interests               1,091    3,718     261     338      159             (31)
Minority interests in consolidated partnerships          76      155       -       -        -               -
Minority interest in Operating Partnership              268    1,267       -       -        -               -
                                                   ----------------------------------------------------------
Income (loss) before extraordinary expense              747    2,296     261     338      159             (31)
Extraordinary expenses related to debt                  888        -       -       -        -               -
refinancing or extinguishment
                                                   ==========================================================
Net income (loss)                                  $   (141)$  2,296  $  261  $  338  $   159          $  (31)
                                                   ==========================================================
Income (loss) before extraordinary expense per     
common share - basic                               $   0.09 $   0.61  $ 0.42  $ 0.55  $  0.26
                                                   ==========================================
Net income (loss) per common share - basic         $  (0.02)$   0.61  $ 0.42  $ 0.55  $  0.26
                                                   ==========================================
Income (loss) before extraordinary expense per     $   0.09 $   0.61  $ 0.42  $ 0.55  $  0.26
common share - diluted                             ==========================================
                                                   
Net income (loss) per common share - diluted       $  (0.02)$   0.61  $ 0.42  $ 0.55  $  0.26
                                                   ==========================================
Weighted average number of common shares              8,449    3,765     620     620      620
outstanding-basic                                  ==========================================
                                                   
Weighted average number of common shares              8,458    3,785     620     620      620
outstanding-assuming dilution                      ==========================================
                                                   
BALANCE SHEET INFORMATION:
Real estate, before accumulated depreciation       $318,599 $147,767  $9,798  $5,393  $ 5,294
                                                   ==========================================
Total assets                                       $327,115 $148,150  $9,521  $5,241  $ 5,377
                                                   ==========================================
Total mortgage and revolving credit facility debt  $196,391 $ 49,058  $5,669  $1,190  $ 1,537
                                                   ==========================================
Minority interests                                 $ 32,872 $ 25,696  $    -  $    -  $     -
                                                   ==========================================
Shareholders' equity                               $ 73,783 $ 68,498  $3,483  $3,703  $ 3,840
                                                   ==========================================
OTHER INFORMATION:
Funds from operations                              $ 12,409 $  5,977  $  596  $  508  $   502
                                                   ==========================================
Cash flow from (used in):
Operating activities                               $ 15,697 $  5,821  $  718  $  585  $   448
                                                   ==========================================
Investment activities                              $(52,635)$(40,440) $ (302) $  (99) $(5,045)
                                                   ==========================================
Financing activities                               $ 50,734 $ 35,546  $ (418) $ (518) $ 5,013
                                                   ==========================================
APARTMENT DATA:
Number of apartment communities (end of period)          61       35       4       3        3
                                                   ==========================================
Number of apartment units (end of period)             6,526    3,403     257     165      165
                                                   ==========================================
Average monthly rental rate per unit               $    758 $    702     676  $  660  $   642
                                                   ==========================================
Average economic occupancy rate                       96.0%    96.1%   95.5%   97.8%    95.6%
                                                   ==========================================
Number of retail properties (end of period)               4        3       0       0        0
                                                   ==========================================
</TABLE>


(1)  The Company  began  operations  on June 24,  1994,  the date of its initial
     public  offering.   The  operations  of  the  predecessor   represents  the
     operations of the Original Properties prior to June 24, 1994.




                                      -15-
<PAGE>




(2)  In conjunction  with the  acquisition of the McNeil Portfolio,  the Company
     paid  approximately $5.6 million for the purchase of the related management
     contracts from an unrelated third party management company. The term of the
     contracts  was for an  average of  approximately  20 years.  The  purchased
     contracts  historically produced gross annual revenue of approximately $1.6
     million. In accordance with generally accepted accounting  principles,  the
     cost of the management contracts has been expensed in the fourth quarter of
     1998;  however this amount,  which is a non-recurring  item, has been added
     back for FFO. The Company plans to self manage the McNeil Portfolio.

ITEM 7.    MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND
           RESULTS OF OPERATIONS

OVERVIEW

The following  discussion  should be read in conjunction  with the  consolidated
financial statements and notes thereto included elsewhere in this Report.

The results of operations for the year ended December 31, 1998 include the three
multifamily properties that the Company has owned since inception (the "Original
Properties"),  a fourth  property that was acquired on January 12, 1996,  twenty
properties  acquired on March 14,  1997 in  conjunction  with the  Consolidation
Transactions,  the  fourteen  properties  subsequently  acquired in 1997 and the
twenty-seven properties purchased in 1998. The Consolidation  Properties and the
fourteen  subsequent  acquisitions  are  collectively  referred  to as the "1997
Acquisitions".  In addition,  all of the previously  mentioned properties of the
Company are collectively referred to as the "1997 Properties".  The twenty-seven
properties  purchased  during 1998  referred to as the "1998  Acquisitions".  In
addition,  all  of the  previously  mentioned  properties  of  the  Company  are
collectively  referred to as the  "Properties".  (See Note 2 to the consolidated
financial statements for details).

RESULTS OF OPERATIONS

RESULTS OF OPERATIONS  OF THE COMPANY FOR THE YEARS ENDED  DECEMBER 31, 1998 AND
1997.

Total revenues increased  $20,894,000 from $17,938,000 to $38,832,000 during the
year ended  December 31, 1998, as compared to the year ended  December 31, 1997.
The increase is mainly due to the operations of the properties  acquired  during
the period from March 1997 to December  31,  1998 (the  "recent  acquisitions").
(See Note 2 to the consolidated financial statements for details).

The Properties  experienced an increase in rental rates and a slight decrease in
occupancy.  The weighted  average monthly rental rates increased to $758 for the
year ended  December  31, 1998 from $702 for the year ended  December  31, 1997.
Economic  occupancy  for the year  decreased  to an aggregate  weighted  average
occupancy  of 96.0% for the year  ended  December  31,  1998  from an  aggregate
weighted average of 96.1% for the year ended December 31, 1997.

Property operating and maintenance expenses increased $7,355,000 from $6,078,000
to $13,433,000  during the year ended December 31, 1998, as compared to the year
ended  December 31, 1997. The increase is primarily due to the operations of the
recent acquisitions.

Real estate taxes increased $2,028,000 from $1,770,000 to $3,798,0000 during the
year ended  December 31, 1998, as compared to the year ended  December 31, 1997.
The  increase  is  primarily  due  to the  recent  acquisitions.  Related  party
management  fees  decreased  $22,000 from $22,000 to $0. This decrease is due to
acquisition by the Company of the management services division of Grove Property
Services  Limited  Partnership  ("GPS") as part of consolidated  transactions in
March 1997.

Interest expense  increased  $4,050,000 from $2,741,000 to $6,791,000 during the
year ended  December 31, 1998, as compared to the year ended  December 31, 1997.
The increase is primarily  due to the  assumption  of mortgage debt and new debt
related to the recent acquisitions.

Depreciation and amortization increased $3,466,000 from $2,701,000 to $6,167,000
during the year ended  December 31, 1998, as compared to the year ended December
31, 1997. The increase is related to the recent acquisitions.

General  and  administrative  expenses  increased  $1,094,000  from  $908,000 to
$2,002,000  during the year ended  December  31,  1998,  as compared to the year
ended December 31, 1997.  This increase is primarily due to the increased  costs
associated with the change in size of the Company.

The Company's income before extraordinary expenses,  related to debt refinancing
and debt extinguishment, decreased $1,549,000 from $2,296,000 to $747,000 during
the year ended  December  31, 1998,  as compared to the year ended  December 31,
1997.





                                      -16-
<PAGE>




The decrease is mainly due to an increase in revenue of  $20,894,000,  offset by
increases in property  operating and  maintenance  expenses of $7,355,000,  real
estate taxes of $2,028,000,  general and administrative  expenses of $1,094,000,
interest expense of $4,050,000,  depreciation and amortization of $3,466,000 and
a $5,550,000  non-recurring expense for the purchase of the management contracts
related to the acquisition of the McNeil Portfolio.

RESULTS OF OPERATIONS  FOR THE COMPANY FOR THE YEARS ENDED DECEMBER 31, 1997 AND
1996.

Total revenues  increased  $15,856,000 from $2,082,000 to $17,938,000 during the
year ended  December 31, 1997, as compared to the year ended  December 31, 1996.
The  increase  is  mainly  due  to the  operations  of  the  1997  Acquisitions.
Additionally,  $518,000  of the  increase  is  related  to  property  management
revenues  which  represent  fees  earned  on  management  services  provided  to
properties owned by affiliated entities. Such revenue is derived from management
contracts acquired in conjunction with the Consolidation Transactions; therefore
there was no comparable revenue during 1996.

On a comparable basis, the 1997 Properties  experienced increases in both rental
rates and occupancy. The weighted average monthly rental rates increased to $702
for the year ended  December 31, 1997 from $676 for the year ended  December 31,
1996.  Furthermore,  economic  occupancy for the year  increased to an aggregate
weighted average occupancy of 96.1% for the year ended December 31, 1997 from an
aggregate weighted average of 95.5% for the year ended December 31, 1996.

Property operating and maintenance  expenses increased  $5,422,000 from $656,000
to $6,078,000  during the year ended  December 31, 1997, as compared to the year
ended  December 31, 1996. The increase is primarily due to the operations of the
1997 Acquisitions.

Real estate taxes increased  $1,562,000  from $208,000 to $1,770,000  during the
year ended  December 31, 1997, as compared to the year ended  December 31, 1996.
The increase is due primarily to the 1997 Acquisitions. Related party management
fees  decreased  $87,000 from  $109,000 to $22,000.  This decrease is due to the
Company's  acquisition  of  the  management  company  in  conjunction  with  the
Consolidation Transactions, resulting in the elimination of all such expenses in
consolidation.

General and administrative  expenses increased $841,000 from $67,000 to $908,000
during the year ended  December 31, 1997, as compared to the year ended December
31, 1996. This increase is mainly due to the increased costs associated with the
change in size of the Company.

Interest  expense  increased  $2,347,000 from $394,000 to $2,741,000  during the
year ended  December 31, 1997, as compared to the year ended  December 31, 1996.
The increase is primarily due to the $38.3 million  mortgage debt assumed and/or
refinanced as part of the 1997 Acquisitions.

Depreciation and amortization  increased  $2,314,000 from $387,000 to $2,701,000
during the year ended  December 31, 1997, as compared to the year ended December
31, 1996. The increased expense is primarily due to depreciation  related to the
1997 Acquisitions.

The Company's net income increased $2,035,000 from $261,000 to $2,296,000 during
the year ended  December  31, 1997,  as compared to the year ended  December 31,
1996. The increase is mainly due to the operations of the 1997 Acquisitions.

SAME COMMUNITY ANALYSIS

FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997.

The 27 apartment communities (2,564 apartments) owned by Grove or its affiliated
predecessors  since  the  beginning  of  1996,  a "Same  Community"  comparison,
experienced  an  increase in average  monthly  rental  rates,  offset by a small
decrease  in average  economic  occupancy  and  experienced  an  increase in net
operating income. On a Same Community basis, the weighted average monthly rental
rate per apartment  increased 3.5% to $731 from $706 and the economic  occupancy
rate  decreased to 95.8% from 96.4% for the twelve months of 1998 as compared to
the twelve months of 1997,  respectively.  Overall, Same Community net operating
income  increased  7.6% to $12.89  million  from  $11.98  million for the twelve
months of 1998 as compared to the twelve months of 1997.  Net  operating  income
increased  due to a 3.0%  increase in revenues  and 2.9%  decrease in  operating
expenses.  Revenues  increased  due to the  increase in rental  rates  partially
offset by a decrease in occupancy. Operating expenses decreased primarily due to
lower  insurance  costs,  utility  costs  and snow  plowing  as a result  of the
unusually  mild weather  experienced in the first quarter of 1998. The following
table summarizes Same Community operations:




                                      -17-
<PAGE>





                                         ---------------------
                                          Twelve Months Ended
                                              December 31,        
                                         ---------------------
                                              (Dollars in
                                              -----------
                                               Millions)
                                               ---------          
                                                                  %
                                             1998     1997     Change
                                             ----     ----     ------
Economic Occupancy                          95.8%     96.4%     -0.6%
                                         =====================
Average monthly rental rate per unit       $  731    $  706      3.5%
                                         =====================
Revenues (millions)                        $21.71    $21.08      3.0%
Operating expenses (millions)                8.82      9.10     -2.9%
                                         ------------------------------
    Net operating income (millions)        $12.89    $11.98      7.6%
                                         ==============================

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash  equivalents  totaled  $15,262,000  as of December 31,  1998.  The
Company's ratio of long-term debt,  including the Revolving Credit Facility,  to
market  capitalization  on December  31,  1998 was 57.4%  based on total  market
capitalization  of  $342,190,000  based on 3,768,775  Common Units and 8,639,659
Common Shares valued at $11.75 per share/unit (the closing price on December 31,
1998)  plus  long-term  debt of  $196,391,000  including  the  Revolving  Credit
Facility.

Cash  provided by operating  activities  was  $15,697,000  for the twelve months
ended December 31, 1998.  Cash used in investing  activities was $52,635,000 for
the twelve  months  ended  December  31,  1998.  Net cash  provided by financing
activities was $50,734,000 for the twelve months ended December 31, 1998.

On December 14, 1998, the Company declared a dividend of $0.17 per share for the
quarter  ended  December 31, 1998.  The dividend was paid on January 15, 1999 to
shareholders  of record on December 31, 1998. On September 15, 1998, the Company
declared a dividend of $0.17 per share for the quarter ended September 30, 1998.
The dividend was paid on October 16, 1998 to shareholders of record on September
30, 1998. On June 15, 1998,  the Company  declared a dividend of $0.17 per share
for the quarter  ended June 30, 1998.  The dividend was paid on July 17, 1998 to
shareholders of record on June 30, 1998. On March 11, 1998, the Company declared
a dividend of $0.17 per share for the quarter ended March 31, 1998. The dividend
was paid on April 17,  1998 to  shareholders  of record on March 31,  1998.  The
dividends  declared  during the year ended  December 31, 1998 of $0.68 per share
resulted in a 63% payout of funds from  operations  for the twelve  months ended
December 31, 1998.

On January 19, 1999 the Company announced an increase in its anticipated  yearly
dividend from $.68 to $.72 per share annually.

On March 15,  1999 the  Company  prepaid  the  Highland  Glen  mortgage  note of
approximately $6.5 million. Additional borrowings under the 1998 Credit Facility
were advanced to fund this prepayment.

In April 1998, the Operating  Partnership  entered into the 1998 Credit Facility
with its bank and retired  the  Original  Revolving  Credit  Facility.  The 1998
Credit Facility  increased the  availability of the credit line to $50.0 million
from $25.0 million and  converted  the line to an unsecured  line from a secured
line. The 1998 Credit Facility bears interest payable monthly at a floating rate
of 1.5% above the 30, 60, or 90-day  LIBOR  rate.  The 1998  Credit  Facility is
available  to  fund  future  property  acquisitions  and up to $5.0  million  is
available to fund working capital needs. As of December 31, 1998,  borrowings of
$34.25 million were outstanding under the 1998 Credit Facility.

Acquisition  Notes Payable are  obligations  related to three McNeil  Properties
(Rockingham Glen, 929 House, and Glen Meadow),  to pay additional cash and issue
additional  Common  Units  when the  properties  are  converted  to market  rate
properties.  On November 30, 1998, the mortgages on two of the properties  (Glen
Meadow and 929 House) were modified to allow these properties to be converted to
80%  market  rate units and 20%  moderate  income  units.  The  Rockingham  Glen
mortgage was modified in the third  quarter of 1998 to allow this property to be
converted  to 80%  market  rate  units  and 20%  moderate  income  units.  It is
anticipated that  approximately  $12.0 million of the Acquisition  Notes Payable
will be paid on April 30, 1999 (consisting of approximately $4.4 million in cash
and $7.6 million in Common  Units).  The  remaining  balance of the  Acquisition
Notes  Payable of  approximately  $0.95  million is  expected  to be paid over a
three-year period.

The Company intends to meet its short-term  liquidity  requirements through cash
on hand,  cash flow provided by operations and borrowings  under the 1998 Credit
Facility. The Company considers its ability to generate cash to be adequate, and
expects it to continue to be adequate  to meet  operating  requirements  and pay
shareholder dividends in accordance with REIT requirements.  The Company may use
other sources of capital to finance additional acquisitions  including,  but not
limited  to,  the  selling  of  additional  equity  interests  in  the  Company,
non-distributed  Funds from Operations,  the issuance of debt securities,  funds
from the 1998 Credit



                                      -18-
<PAGE>




Facility,  and  exchanging  Common  Shares or Common  Units  for  properties  or
interests in properties.

The  Company  regularly  evaluates   properties  for  possible   acquisition  or
disposition.  Individual  properties may be acquired  through direct purchase of
the property or through the purchase of the entity  owning such property and may
be made for cash or securities of the Company or the Operating  Partnership.  In
connection with any acquisition,  the Company may incur additional indebtedness.
If the  Company  acquires  or  disposes of any  property,  such  acquisition  or
disposition  could  have  a  significant  effect  on  the  Company's   financial
condition, results of operations or cash flows.

YEAR 2000

In the course of the Company's  planned  upgrade of its  information  systems to
accommodate  growth of its  business,  the Company will assure that its computer
software  and  hardware  will be year  2000  compliant.  To  date,  the  Company
anticipates that the upgrade of its information systems will be completed during
1999 and  believes  that the cost  thereof is not  material  and will not have a
material impact on net income, assets or liabilities. The Company has incurred $
0  specifically  related to Year 2000  compliance  and  anticipates  $ 50,000 of
future  related  costs.  The Company The Company has begun to identify the other
non-information  systems  that depend on  microprocessors  in the conduct of its
business. Because of the nature of the Company's business, it does not depend to
any material  extent on electronic  interchange of data or information  with its
residents,  suppliers or vendors.  The  following  table  outlines The Company's
status to date of risks associated with the Year 2000 problem:

<TABLE>
<CAPTION>
-------------------- -------------------- -------------------- -------------------- --------------------
                          ASSESSMENT          REMEDIATION            TESTING           IMPLEMENTATION
-------------------- -------------------- -------------------- -------------------- --------------------
<S>                  <C>                  <C>                  <C>                  <C>         
INFORMATION          100% Complete        70% Complete         70% Complete         70% Complete
TECHNOLOGY
                                          Expected             Expected             Expected
                                          completion date,     completion date,     completion date,
                                          October 1999         October 1999         October 1999
-------------------- -------------------- -------------------- -------------------- --------------------
OPERATING
EQUIPMENT WITH       100% Complete        50% Complete         30% Complete         20% Complete
EMBEDDED CHIPS OR
SOFTWARE                                  Expected             Expected             Expected
                                          completion date,     completion date,     completion date,
                                          September 1999       September 1999       September 1999
-------------------- -------------------- -------------------- -------------------- --------------------

3RD PARTY            Expected             50% Complete         50% Complete         50% Complete
                     completion date
                     for surveying all
                     third parties,
                     June 1999
-------------------- -------------------- -------------------- -------------------- --------------------
</TABLE>


Although the Company  believes that there will be no direct material  effects on
its net income,  assets or liabilities  from the Year 2000 problem as it relates
to the above  stated  systems,  it is not  possible  to quantify  any  potential
indirect  effects  that may result from the lack of Year 2000  readiness  on the
part of other third parties with whom the Company conducts its business.

Widespread  disruptions  in the  national or  international  economy,  including
disruptions  affecting the financial  markets,  resulting from Year 2000 issues,
could also have an adverse  impact on the Company.  The likelihood and effect of
such disruptions to residential,  subsidized residential,  and retail properties
is not  determinable  at  this  time.  The  Company's  fallback  position,  if a
disruption   does  occur,   is  to  rebuild   its   information   systems   from
contemporaneous  manual monthly records maintained at the Company's main office.
Property sites consist mainly of single-story  and low-rise  buildings with very
little reliance on microprocessors imbedded in systems that are part of property
operating systems.  Any possible disruption can be avoided by manually operating
these property systems.

FUNDS FROM OPERATIONS

Industry  analysts  generally  consider Funds from  Operations  ("FFO") to be an
appropriate  measure of  performance of an equity REIT. FFO is defined as income
before  gains  (losses) on  investments  and  extraordinary  items  (computed in
accordance  with  generally  accepted  accounting  principles)  plus real estate
depreciation,  less preferred  dividends and after  adjustment  for  significant
non-recurring items, if any. This definition conforms to the recommendations set
forth in a White  Paper  adopted  by the  National  Association  of Real  Estate
Investment  Trusts  ("NAREIT")  in early 1995.  FFO for years prior to 1997 have
been adjusted to conform to the NAREIT definition.  The Company believes that in
order to facilitate a clear  understanding of its operating results,  FFO should
be examined in  conjunction  with the net income as presented  in the  financial
statements  and  information  included  elsewhere in this  Report.  FFO does not
represent cash generated from operating  activities in accordance with generally
accepted  accounting  principles  and  is not  necessarily  indicative  of  cash
available to fund cash needs.  FFO should not be considered as an alternative to
net income as an indication of the Company's performance or as an alternative to
cash flow as a measure of liquidity.





                                      -19-
<PAGE>




FFO increased  $6,432,000  from  $5,977,000 to  $12,409,000  for the years ended
December 31, 1997 and 1998, respectively.  Dividends declared for the year ended
December 31, 1998 were  $5,782,000,  representing  63% of FFO,  while  dividends
declared for the year ended December 31, 1997 were $2,423,000,  representing 63%
of FFO.

FFO increased  $5,381,000 from $596,000 in 1996 to $5,977,000 in 1997. Dividends
declared for the year ended December 31, 1997 were $2,423,000  representing  63%
of FFO.  Dividends  declared for the year ended  December 31, 1996 were $481,000
representing 81% of FFO.

FFO was calculated as follows:

                                             For the Year Ended December 31,
                                             -------------------------------
                                                  (dollars in thousands)


                                                 1998       1997      1996
                                                 ----       ----      ----
Income before extraordinary expenses and      
 minority interests                            $ 1,091    $ 3,718    $  261
Real estate depreciation and amortization        5,894      2,530       335
Non-recurring expenses                           5,550         69         -
                                               ----------------------------
Funds from operations before extraordinary      12,535      6,317       596
 expenses and minority interests
Minority interests in consolidated                (126)      (340)        -
 partnerships                                  ----------------------------
FFO                                            $12,409      5,977       596
                                               ============================

SEASONALITY

Historically,  net income  from the  Properties  has been lower in the first and
second quarters than in the remainder of the year due to higher utility charges,
snow removal and other  weather  related  expenses.  In  addition,  rental rates
increase  ratably during the year which results in higher rental revenues in the
second half of the year.

INFLATION

Substantially  all of the leases at the Apartment  Communities are for a term of
one year or less,  which may enable the  Company  to seek  increased  rents upon
renewal or rerenting.  Such short-term  leases  generally lessen the risk to the
Company of the potential adverse effects of inflation.

"SAFE HARBOR" STATEMENT UNDER PRIVATE SECURITIES LITIGATION REFORM ACT OF 1996

Certain  statements  contained  in  this  report,  and  in  particular  in  this
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations,"  statements  in other  filings  with the  Securities  and  Exchange
Commission  and  statements  in other  public  documents  of the  Company may be
forward looking and are subject to a variety of risks and uncertainties. Forward
looking   statements   generally  contain  words  like  "believes,"   "expects,"
`anticipates"  or words of similar  import.  Many  factors  could  cause  actual
results to differ materially from these statements.  These factors include,  but
are not limited to, (i)  population  shifts  which may  increase or decrease the
demand for  rental  housing,  (ii) the  ability of the  Company  effectively  to
integrate  recently  acquired  properties  into its  operations and to adapt its
operations to the ownership of subsidized housing, (iii) the value of commercial
and  residential  rental  properties in the Northeast where all of the Company's
properties are located, in recent years, have fluctuated considerably,  (iv) the
effect on the Company's  properties of competition from new apartment  complexes
which may be  completed  in  proximity  to such  properties  thereby  increasing
competition,   (v)  the  effect  of  weather  and  other  conditions  which  can
significantly  affect  property  operating  expenses,  (vi) the  availability of
acquisition financing or refinancing,  (vii) compliance with applicable laws and
regulations, including the regulations of HUD and MHFA, and (viii) other factors
which might be  described  from time to time in the  Company's  filings with the
Securities and Exchange Commission.  In addition,  the Company is subject to the
effects of changes in the general business economic conditions.

Although the Company believes that its properties will continue to be attractive
to tenants  and that it will be able to control  expenses,  future  revenue  and
operating  trends  cannot be  reliably  predicted.  These  trends  may cause the
Company to adjust its operation in the future.  Factors  external to the Company
can also  affect  the  price of the  Company's  Common  Shares.  Because  of the
foregoing and other  factors,  recent  trends should not be considered  reliable
indicators of future financial results or stock prices.





                                      -20-
<PAGE>






ITEM 7A.  MARKET RISK AND RISK MANAGEMENT POLICIES

The  Company is exposed to changes in  interest  rates  primarily  from its 1998
Credit  Facility.  A  hypothetical  100 basis point  adverse move  (decrease) in
interest rates along the entire interest rate yield curve would adversely affect
the net fair value of all interest sensitive financial  instruments by $ 342,500
at December 31, 1998.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements are included on pages F-1 to F-20.

ITEM 9.  CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
         FINANCIAL DISCLOSURE

None

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  information  required by this Item 10 is incorporated by reference from the
Company's definitive Proxy Statement for its 1999 Annual Meeting of Shareholders
to be filed  pursuant to Regulation  14A  promulgated  under the  Securities and
Exchange Act of 1934,  which Proxy Statement will be filed within 120 days after
the end of the Company's fiscal year ended December 31, 1998.

ITEM 11.  EXECUTIVE COMPENSATION

The  information  required by this Item 11 is incorporated by reference from the
Company's definitive Proxy Statement for its 1999 Annual Meeting of Shareholders
to be filed  pursuant to Regulation  14A  promulgated  under the  Securities and
Exchange Act of 1934,  which Proxy Statement will be filed within 120 days after
the end of the Company's fiscal year ended December 31, 1998.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  information  required by this Item 12 is incorporated by reference from the
Company's definitive Proxy Statement for its 1999 Annual Meeting of Shareholders
to be filed  pursuant to Regulation  14A  promulgated  under the  Securities and
Exchange Act of 1934,  which Proxy Statement will be filed within 120 days after
the end of the Company's fiscal year ended December 31, 1998.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The  information  required by this Item 13 is incorporated by reference from the
Company's definitive Proxy Statement for its 1999 Annual Meeting of Shareholders
to be filed  pursuant to Regulation  14A  promulgated  under the  Securities and
Exchange Act of 1934,  which Proxy Statement will be filed within 120 days after
the end of the Company's fiscal year ended December 31, 1998.

PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) FINANCIAL STATEMENTS:

The  financial   statements  listed  in  the  accompanying  Index  to  Financial
Statements and Supplementary Data at page F-1 are filed as part of this Report.

(a)(2) FINANCIAL STATEMENT SCHEDULES:

Schedule III,  Real Estate and  Accumulated  Depreciation,  is included on pages
F-21 to F-24 of this report.




                                      -21-
<PAGE>





(a)(3) EXHIBITS:


   EXHIBIT NO.                            DESCRIPTION

       2.1         Contribution  Agreement,  dated  as of May 30,  1997,  by and
                   between Grove Operating, L.P., Northeast Apartments I Limited
                   Partnership,   West  Hartford   Center   Associated   Limited
                   Partnership,  Windsor Equity  Partnership and Windsor Commons
                   Corporation  (incorporated by reference to Exhibit 2.1 to the
                   Company's  Current  Report  on Form 8-K  dated  May 30,  1997
                   (Commission File No. 1-13080))

       2.2         Form of  First  Amendment  effective  as of  June 1,  1997 to
                   Agreement of Limited  Partnership  of Windsor  Arbor  Limited
                   Partnership  (incorporated by reference to Exhibit 2.2 to the
                   Company's  Current  Report  on Form 8-K  dated  May 30,  1997
                   (Commission File No. 1-13080))

       2.3         Purchase  and Sale  Agreement,  dated May 14,  1997,  between
                   Highland  Income  Partners,   L.P.,  as  Seller,   and  Grove
                   Corporation,   a  Purchaser  (incorporated  by  reference  to
                   Exhibit 2.1 to the Company's Current Report on Form 8-K dated
                   July 2, 1997 (Commission File No. 1-13080))

       2.4         Purchase and Sale Agreement,  dated September 5, 1997, by and
                   between Werner O. Kunzli, as Seller, and Grove Corporation, a
                   Purchaser  (incorporated  by  reference to Exhibit 2.4 to the
                   Company's Registration Statement on Form S-2, No. 333-38183)

       2.5         Grove Operating,  L.P.,  Solicitation of Consent and Offer to
                   Exchange  Certain  Outstanding  Units of Limited  Partnership
                   Interest in Grove-Coastal Associates,  L.P. for Consideration
                   of 3,435.5  Common  Units of Grove  Operating,  L.P.  with an
                   option to  holders  to instead  receive  cash  consideration,
                   dated June 19, 1997, as  supplemented  on June 19, 1997,  and
                   Letter of  Transmittal  and Addendum to Letter of Transmittal
                   in connection therewith (incorporated by reference to Exhibit
                   2.5 to the Company's  Registration Statement on Form S-2, No.
                   333-38183)

       2.6         Agreement  dated  as  of  April  22,  1998  among  The  Grove
                   Corporation   and   the   twenty-two   limited   partnerships
                   identified on Schedule 1 thereto  (incorporated  by reference
                   to Exhibit 2.1 to the  Company's  Current  Report on Form 8-K
                   dated October 30, 1998 (Commission File No. 1-13080))

       2.7         Amendment dated as of August 31, 1998 to Conveyance Agreement
                   dated as of April 22,  1998 among The Grove  Corporation  and
                   the twenty-two limited partnerships  identified on Schedule 1
                   thereto  (incorporated  by  reference  to Exhibit  2.2 to the
                   Company's  Current  Report on Form 8-K dated October 30, 1998
                   (Commission File No. 1-13080))

       3.1         Third  Amended  and  Restated  Declaration  of  Trust  of the
                   Company   dated  March  14,  1997,  as  amended  by  Articles
                   Supplementary  dated  October  23,  1997 and by  Articles  of
                   Amendment dated June 30, 1998  (incorporated  by reference to
                   Exhibit 3.0 to the  Company's  Quarterly  Report on Form 10-Q
                   for the  period  ended  June 30,  1998  (Commission  File No.
                   1-123080))

       3.2         Amended and Restated Bylaws of the Company  (incorporated  by
                   reference to Exhibit 3.2 to the Company's  Current  Report on
                   Form 8-K dated  March  14,  1997 and  filed  March  31,  1997
                   (Commission File No. 1-13080))

       4.1         Form of Agreement of Limited  Partnership of Grove Operating,
                   L.P.,  among the Company and the other partners named therein
                   (incorporated  by reference to Exhibit 10.2 to the  Company's
                   Current   Report  on  Form  8-K  dated   February   13,  1997
                   (Commission File No. 1-13080))

       4.2         Amendment to the  Agreement of Limited  Partnership  of Grove
                   Operating,  L.P.  among the  Company  and the other  partners
                   named  therein  (incorporated  by reference to Exhibit 4.3 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)




                                      -22-
<PAGE>






       4.3         Revolving Credit  Agreement among Grove Operating,  L.P., and
                   Rhode Island  Hospital  Trust National Bank (a Bank of Boston
                   company)  and Other  Banks  which may  become  parties to the
                   Agreement and Rhode Island  Hospital  Trust National Bank, as
                   Agent BancBoston Securities, Inc. As Arranger Dated April 30,
                   1998  (incorporated  by  reference  to  Exhibit  4.1  to  the
                   Company's Quarterly Report on Form 10-Q for the quarter ended
                   June 30, 1998 (Commisssion File No. 1-13080))

      10.1         Securities  Purchase  Agreement,  dated  February  20,  1997,
                   between   the   Company  and   Morgan   Stanley  Group   Inc.
                   (incorporated  by reference  to Exhibit 10.1 to the Company's
                   Current  Report on  Form 8-K dated March 14, 1997 (Commission
                   File No. 1-13080))

      10.2         Securities  Purchase  Agreement,  dated  February  21,  1997,
                   between  the  Company  and  ABKB/LaSalle  Securities  Limited
                   (incorporated  by reference to Exhibit 10.2 to the  Company's
                   Current  Report on Form 8-K dated March 14, 1997  (Commission
                   File No. 1-13080))

      10.3         Form of  Securities  Purchase  Agreement  executed  by  other
                   Investors in the Private Placement (incorporated by reference
                   to Exhibit 10.3 to the Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.4         Registration Rights Agreement,  dated March 14, 1997, between
                   the Company and the Investors  (incorporated  by reference to
                   Exhibit  10.4 to the  Company's  Current  Report  on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.5         Registration Rights Agreement,  dated March 14, 1997, between
                   the Company,  Grove  Operating,  L.P. and certain partners of
                   Grove Operating,  L.P.  (incorporated by reference to Exhibit
                   10.9 to the Company's  Current Report on Form 8-K dated March
                   14, 1997 (Commission File No. 1-13080))

      10.6         1994 Share Option  Plan (incorporated by reference to Exhibit
                   10.16 to the  Company's Registration  Statement on  Form SB-2
                   (File No. 33-76732))

      10.7         1996 Share  Incentive  Plan of Grove  Property  Trust,  Grove
                   Operating LP and Property  Partnerships,  as amended to March
                   11,  1998  (incorporated  by  reference  to Appendix A to the
                   Company's  Notice of Annual Meeting and Proxy Statement dated
                   April 30, 1998 (Commission File No. 1-13080))

      10.8         Noncompetition  Agreement,  dated March 14,  1997,  among the
                   Company,  Grove  Operating,  L.P.,  National  Realty Services
                   Limited  Partnership,  GIG and  Burgundy  Associates  Limited
                   Partnership  (incorporated  by reference to Exhibit  10.12 to
                   the Company's Current Report on Form 8-K dated March 14, 1997
                   (Commission File No. 1-13080))

      10.9         Form of  Noncompetition  Agreement  executed by each of Damon
                   Navarro, Brian Navarro,  Joseph LaBrosse,  Edmund Navarro and
                   Gerald McNamara  (incorporated  by reference to Exhibit 10.13
                   to the Company's  Current  Report on Form 8-K dated March 14,
                   1997 (Commission File No. 1-13080))

      10.10        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Damon Navarro  (incorporated by reference to Exhibit 10.15 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.11        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Brian Navarro  (incorporated by reference to Exhibit 10.16 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.12        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Edmund Navarro (incorporated by reference to Exhibit 10.17 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.13        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Joseph LaBrosse  (incorporated  by reference to Exhibit 10.18
                   of the  Company's  Registration  Statement  on Form S-2,  No.
                   333-38183)




                                      -23-
<PAGE>






      10.14        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Gerald McNamara  (incorporated  by reference to Exhibit 10.19
                   of the  Company's  Registration  Statement  on Form S-2,  No.
                   333-38183)

      10.15        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company  and Damon  Navarro  (incorporated  by  reference  to
                   Exhibit  10.14 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.16        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Damon Navarro  (incorporated by reference to Exhibit 10.21 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.17        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company  and Brian  Navarro  (incorporated  by  reference  to
                   Exhibit  10.15 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.18        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Brian Navarro  (incorporated by reference to Exhibit 10.23 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.19        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company and Edmund  Navarro  (incorporated  by  reference  to
                   Exhibit  10.16 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.20        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Edmund Navarro (incorporated by reference to Exhibit 10.25 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.21        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company and Joseph  LaBrosse  (incorporated  by  reference to
                   Exhibit  10.17 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.22        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Joseph LaBrosse  (incorporated  by reference to Exhibit 10.27
                   of the  Company's  Registration  Statement  on Form S-2,  No.
                   333-38183)

      10.23        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company and Gerald  McNamara  (incorporated  by  reference to
                   Exhibit  10.18 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.24        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Gerald McNamara  (incorporated  by reference to Exhibit 10.29
                   of the  Company's  Registration  Statement  on Form S-2,  No.
                   333-38183)

      10.25        Form of  Contribution  Agreement  among  the  Company,  Grove
                   Operating,  L.P. and certain other parties  (incorporated  by
                   reference to Exhibit 10.1 to the Company's  Current Report on
                   Form  8-K  dated  February  13,  1997  (Commission  File  No.
                   1-13080))

      10.26        Form of Indemnification Agreement by and between the Company,
                   the Trust Managers and each of Damon Navarro,  Brian Navarro,
                   Edmund  Navarro,   Joseph   LaBrosse,   and  Gerald  McNamara
                   (incorporated  by reference to Exhibit 10.18 to the Company's
                   Registration Statement on Form SB-2 (No. 33-76732))

      10.27        Assumption of Mortgage Deed and Security  Agreement made June
                   23, 1994 by and among Southington Baron Limited  Partnership,
                   Charles  D.  Gersten,  Ada C  Berin,  the  Company,  Damon D.
                   Navarro and Brian A.  Navarro  (incorporated  by reference to
                   Exhibit 10.22 to the  Company's  Annual Report on Form 10-KSB
                   for the year ended  December  31, 1994  (Commission  File No.
                   1-13080))

      10.28        Mortgage Note from Southington  Baron Limited  Partnership to
                   Charles  D.  Gersten  and Ada C.  Berin  dated  June 8,  1994
                   (incorporated  by reference to Exhibit 10.23 to the Company's
                   Annual Report on Form 10-KSB for the year ended  December 31,
                   1994 (Commission File No. 1-13080))




                                      -24-
<PAGE>






      10.29        Purchase  and Sale  Agreement  between  the Company and Grove
                   Cambridge  Associates  Limited  Partnership  (incorporated by
                   reference  to Exhibit 1 to the  Company's  Current  Report on
                   Form  8-K  dated  October  30,  1995   (Commission  File  No.
                   1-13080))

      10.30        Mortgage  Note  from  the  Company  to  First  Union  Bank of
                   Connecticut dated January 11, 1996 (incorporated by reference
                   to  Exhibit  10.25 to the  Company's  Annual  Report  on Form
                   10-KSB for the year ended December 31, 1995  (Commission File
                   No. 1-13080))

      10.31        Unlimited Guaranty among Grove Property Trust and Bankboston,
                   N.A. dated November 6, 1998

       21          List of Subsidiaries

       23          Consent of Ernst & Young, LLP

       27          Financial Data Schedule


(b) REPORTS ON FORM 8-K

During the fourth quarter of the year ended December 31, 1998, the Company filed
a Current Report on Form 8-K dated October 30, 1998 (reporting under Items 2 and
7) regarding the Company's  acquisition of nineteen  residential  properties;  a
Current  Report on Form 8-K/A no. 1 dated  October 30, 1998,  amending Item 7 as
originally  filed;  and a  Current  Report on Form 8-K  dated  December  2, 1998
(reporting  under Items 5, and 7) regarding  the  Company's  acquisition  of two
residential properties.




                                      -25-
<PAGE>





                                   SIGNATURES

        Pursuant to 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, on March 30, 1999.

                                            GROVE PROPERTY TRUST


                                            By  /s/ Joseph R. LaBrosse
                                                -----------------------------
                                                Joseph R. LaBrosse
                                                Chief Financial Officer


        Pursuant to 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>

Name                       Title                                         Date
----                       -----                                         ----

<S>                        <C>                                           <C> 
/s/ Damon D. Navarro       Trust Manager and Chairman of the Board       March 30, 1999
----------------------     and Chief Executive Officer (Principal
Damon D. Navarro           executive officer)
                         


/s/ Joseph R. LaBrosse     Trust Manager and Chief Financial Officer     March 30, 1999
----------------------     (Principal financial and accounting
Joseph R. LaBrosse         officer)
                           
                          
                          
/s/ Edmund F. Navarro      Trust Manager and Chief Operating Officer     March 30, 1999
----------------------                                               
Edmund F. Navarro         
                          
                          
/s/ J. Joseph Garrahy      Trust Manager                                 March 30, 1999
----------------------    
J. Joseph Garrahy                        
                          
                          
/s/ Harold V. Gorman       Trust Manager                                 March 30, 1999
----------------------    
Harold V. Gorman          
                          
                          
/s/ Gerald A. McNamara     Trust Manager                                 March 30, 1999
----------------------    
Gerald A. McNamara        
                          
                          
/s/ J. Timothy Morris      Trust Manager                                 March 30, 1999
----------------------    
Timothy Morris            
                          
                          
/s/ Keith Munsell          Trust Manager                                 March 30, 1999
----------------------    
Keith Munsell             
                          
                          
/s/ James F. Twaddell      Trust Manager                                 March 30, 1999
----------------------    
James F. Twaddell         
</TABLE>                  
                                                                           
                                      -26-
<PAGE>







                              GROVE PROPERTY TRUST

                 Consolidated Financial Statements and Schedule
                                      Index
--------------------------------------------------------------------------------



                                                                            Page
                                                                            ----

      Item 14(a) (1 and 2) Financial Statements filed as part of this
      report

      Consolidated Financial Statements:

      Report of Independent Auditors                                         F-2

      Consolidated Balance Sheets as of December 31, 1998 and 1997           F-3

      Consolidated Income Statements for the years ended
      December 31, 1998, 1997 and 1996                                       F-4

      Consolidated Statements of Changes in Shareholders' Equity
      for the years ended December 31, 1998, 1997 and 1996                   F-6

      Consolidated Statements of Cash Flows for the years ended
      December 31, 1998, 1997 and 1996                                       F-7

      Notes to Consolidated Financial Statements                             F-9

      Schedule filed as part of this report:

      Schedule III - Real Estate and Accumulated Depreciation               F-21


All other schedules are omitted since the required information is not present in
amounts  sufficient  to  require  submission  of the  schedule  or  because  the
information required is included in the financial statements and notes thereto.









                                      F-1
<PAGE>






                         Report Of Independent Auditors


The Shareholders and Board of Trust Managers
Grove Property Trust

We have audited the accompanying  consolidated  balance sheets of Grove Property
Trust as of  December  31,  1998 and 1997 and the  related  consolidated  income
statements, changes in shareholders' equity and cash flows for each of the three
years in the period ended  December 31, 1998. We have also audited the financial
statement  schedule listed on the Index as item 14a. These financial  statements
and  financial  statement  schedule  are  the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements and financial statement schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance  about  whether the  financial  statements  and  financial
statement  schedule  are  free  of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements  and  financial  statement  schedule.  An audit  also
includes assessing the accounting principles used and significant estimates made
by  management,   as  well  as  evaluating  the  overall   financial   statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the consolidated  financial  position of Grove Property
Trust as of December 31, 1998 and 1997 and the results of its operations and its
cash flows for each of the three years in the period ended  December 31, 1998 in
conformity with generally accepted accounting  principles.  Also in our opinion,
the financial  statement schedule referred to above, when considered in relation
to the basic financial  statements  taken as a whole,  presents  fairly,  in all
material respects the information set forth therein.


                              /s/Ernst & Young LLP

New York, New York
February 5, 1999






                                      F-2
<PAGE>



<TABLE>
<CAPTION>

                              GROVE PROPERTY TRUST
                           CONSOLIDATED BALANCE SHEETS
                    (Dollars in thousands, except par value)

                                                          As of  December 31,
                                                          -------------------

                                                      1998                  1997
                                                      ----                  ----
                                       ASSETS
Real estate assets:
    <S>                                       <C>                   <C>           
    Land                                      $       47,208        $       21,403
    Buildings and improvements                       268,683               125,412
    Furniture, fixtures and equipment                  2,708                   952
                                              ------------------    -----------------
                                                     318,599               147,767
    Less accumulated depreciation                     (9,651)               (3,674)
                                              ------------------    -----------------
      Net real estate assets                         308,948               144,093
Cash and cash equivalents                             15,262                 1,466
Due from affiliates                                      262                   620
Deferred charges, net of accumulated
amortization of $153 and $127, respectively            1,192                   849
Other assets                                           1,451                 1,122
                                              ------------------    -----------------
  Total assets                                $      327,115        $      148,150
                                              ==================    =================


                        LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
    Mortgage notes payable (including
      $9,421 fair value step up)              $      162,141         $      33,457
    Revolving credit facility                         34,250                15,601
    Other liabilities                                  5,723                 1,387
    Acquisition notes payable                         12,951                     -
    Distributions payable                              2,062                 1,436
    Security deposits                                  3,194                 2,026
    Due to affiliates                                    139                    49
                                              ------------------    -----------------
  Total liabilities                                  220,460                53,956
Minority interests in consolidated                       686                 1,357
partnerships
Minority interest in Operating Partnership            32,186                24,339
Shareholders' equity:
    Preferred shares, $.01 par value per
    share,
      1,000,000 shares authorized; no shares
      issued or outstanding                                -                     -
    Common shares, $.01 par value per share,
      34,000,000 shares authorized; 8,639,659
      and 8,453,829 shares issued and
      outstanding, respectively                           86                    84
    Additional paid-in capital                        80,182                68,976
    Distributions in excess of earnings               (6,485)                 (562)
                                              ------------------    -----------------
  Total shareholders' equity                          73,783                68,498
                                              ------------------    -----------------
  Total liabilities and shareholders' equity  $      327,115        $      148,150
                                              ==================    =================
</TABLE>

See notes to consolidated  financial statements.





                                      F-3
<PAGE>





                              GROVE PROPERTY TRUST
                         CONSOLIDATED INCOME STATEMENTS
                      (In thousands, except per share data)

<TABLE>
<CAPTION>

                                                                 For the Year Ended December 31,
                                                                 -------------------------------

                                                                1998          1997          1996
                                                                ----          ----          ----

Revenues:
    <S>                                                      <C>           <C>            <C>   
    Rental income                                            $37,994       $17,111        $2,046
    Property management income-affiliates                        477           518             -
    Other property related income                                178           168             5
    Interest  income                                             183           141            31
                                                       ------------------------------------------
        Total revenues                                        38,832        17,938         2,082
                                                       ------------------------------------------


Expenses:
    Property operating expenses                               13,433         6,078           656
    Real estate taxes                                          3,798         1,770           208
    Related party management fees                                  -            22           109
    Interest expense                                           6,791         2,741           394
    Non-recurring acquisition expense                          5,550             -             -
    Depreciation expense                                       5,977         2,568           356
   Amortization expense                                          190           133            31
    General and administrative                                 2,002           908            67
                                                       ------------------------------------------
        Total expenses                                        37,741        14,220         1,821
                                                       ------------------------------------------


            Income before extraordinary expense and            1,091         3,718           261
            minority interests

Minority interest in consolidated partnerships                    76           155             -
Minority interest in operating partnership                       268         1,267             -
                                                       ------------------------------------------
           Income before extraordinary expense                   747         2,296           261

Extraordinary expenses related to debt refinancing and
extinguishment                                                   888             -             -
                                                       ------------------------------------------

          Net income  (loss)                                   $(141)       $2,296          $261
                                                       ==========================================

Income before extraordinary expenses per common
share-basic and assuming dilution                              $0.09         $0.61         $0.42
Extraordinary expenses per common share-basic and
assuming dilution                                               0.11             -             -
                                                       ==========================================
Net income (loss) per common share-basic and assuming         $(0.02)        $0.61         $0.42
dilution
                                                       ==========================================
</TABLE>





                                      F-4
<PAGE>




<TABLE>
<CAPTION>


<S>                                                            <C>           <C>             <C>
Weighted average number of common shares                       8,449         3,765           620
outstanding-basic
Effect of warrants and stock options                               9            20             -
                                                       ------------------------------------------
Weighted average number of common shares
outstanding-assuming dilution                                  8,458         3,785           620
                                                       ==========================================
</TABLE>

See notes to consolidated financial statements.




                                      F-5
<PAGE>







<TABLE>
<CAPTION>

                              GROVE PROPERTY TRUST
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                             (Dollars in thousands)


                                              Number of                 Additional    Dividends
                                               Common        Common       Paid-In     in Excess
                                               Shares        Shares       Capital    of Earnings
                                               ------        ------       -------    -----------

<S>                                            <C>        <C>           <C>          <C>       
Shareholders' equity as of January 1, 1996     620,102    $      6      $   3,912    $    (215)
Net income                                           -           -              -          261
Declared dividends                                   -           -              -         (481)
                                             ------------ ------------- ------------ -------------
Shareholders' equity as of December 31,        620,102           6          3,912         (435)
1996
Issuance of common shares on March 14,
1997, net of offering costs                  3,333,333          33         27,491            -
Exercise of stock options                          394           -              4            -
Issuance of common shares on November 24,
  1997, net of offering costs                4,500,000          45         45,223            -
Net income                                           -           -              -        2,296
Declared dividends                                   -           -              -       (2,423)
Allocation of shareholders' equity to
minority interest in Operating Partnership           -           -        (7,654)            -
                                             ------------ ------------- ------------ -------------
Shareholders' equity as of December 31,      8,453,829          84         68,976        (562)
  1997
OP Units exchanged July 1998 through
  December 1998                                 35,307           -         10,348           -
Issuance of executive stock grants on
  September 15, 1998                            63,153           1            119           -
Common shares repurchased September 1998
  through December 1998                       (304,630)         (3)        (2,979)          -
Private placement to executive officers on
  November 30, 1998                            392,000           4          3,886           -
Net loss                                             -           -              -        (141)
Declared dividends                                   -           -              -      (5,782)
Allocation of shareholders' equity to
  minority interest in Operating                     
  Partnership-net                                    -           -           (168)           -
                                             ============ ============= ============ =============
Shareholders' equity as of December 31,      8,639,659    $     86      $  80,182    $  (6,485)
1998
                                             ============ ============= ============ =============
</TABLE>



See notes to consolidated  financial statements.




                                      F-6
<PAGE>








<TABLE>
<CAPTION>

                              GROVE PROPERTY TRUST
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                                              For the Year Ended December 31,
                                                              -------------------------------

                                                            1998             1997         1996
                                                            ----             ----         ----
OPERATING ACTIVITIES:
<S>                                                   <C>               <C>         <C>        
Net income (loss)                                     $      (141)      $    2,296  $       261
Adjustments to reconcile net income (loss) to net
  cash provided by operating activities
       Depreciation and amortization                        6,167            2,701          387
       Extraordinary expenses - related to debt
       refinancings, and extinguishment                       888                -            -
       Minority interests                                     344            1,422            -
       Non-cash compensation expense                          120              120            -
       Imputed interest - mortgage                              -               22           38
Non-recurring acquisition expense                           5,550                -            -
Changes in other assets                                       122             (347)          (8)
Changes in accounts payable, accrued
  expenses and other liabilities                            2,647             (393)          98
                                                      -------------------------------------------
Net cash provided by operating activities                  15,697            5,821          776
                                                      -------------------------------------------

INVESTING ACTIVITIES:
Non-recurring acquisition expense                           5,550                -            -
Purchase of partnership interests                         (19,456)         (10,417)           -
Cash acquired on purchase of partnership interests         11,031            3,565            -
Deferred charges                                              (50)              (6)        (174)
Additions to real estate assets                           (38,610)         (33,582)      (4,629)
                                                      -------------------------------------------
    Net cash used in investing activities                 (52,635)         (40,440)      (4,803)
                                                      -------------------------------------------

FINANCING ACTIVITIES:
Net proceeds from mortgage notes payable and
  Revolving Credit Facility                                81,650           51,109        4,720
Financing costs, prepayment penalty on debt and            (2,158)            (668)         (21)
  offering costs
Repayment of mortgage notes payable                       (22,438)         (84,438)         (59)
Net proceeds from sale of common stock and exercise
  of stock options                                          3,890           72,796            -
Borrowings from (payments to) affiliates                       67             (659)         (78)
Treasury stock                                             (2,982)               -            -
Dividends and distributions paid                           (7,295)          (2,594)        (480)
                                                      -------------------------------------------
    Net cash provided by (used in) financing               50,734           35,546       (4,082)
    activities
                                                      -------------------------------------------

Net change in cash and cash equivalents                    13,796              927           55

Cash and cash equivalents, beginning of year                1,466              539          484
                                                      -------------------------------------------

Cash and cash equivalents, end of year                $    15,262       $    1,466  $       539
                                                      ===========================================
</TABLE>




                                      F-7
<PAGE>





<TABLE>
<CAPTION>

Supplemental Information:
    <S>                                                   <C>              <C>             <C>        
    Cash paid for interest                                $     6,913      $    2,600      $       400
    Net rental property acquired in connection with     
    debt assumed                                          $    88,120      $   76,696      $         -
    OP Units exchanged for net rental properties          $    10,143      $   15,279      $         -
    Step-up in basis related to property acquisitions     $    12,636      $        -      $         -
    Excess of liabilities over assets assumed on        
    acquisition and partnership interests                 $     1,989      $    1,995      $         -
</TABLE>                                               

See notes to consolidated  financial statements.




                                      F-8
<PAGE>




                              GROVE PROPERTY TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                DECEMBER 31, 1998


1.  FORMATION AND DESCRIPTION OF THE COMPANY

    Grove  Property  Trust   (formerly  Grove  Real  Estate  Asset  Trust)  (the
    "Company") was organized in the State of Maryland on April 4, 1994 as a Real
    Estate Investment Trust ("REIT").  The Company currently  operates sixty-one
    apartment  communities and four specialty retail  properties.  The apartment
    communities are generally mid-priced or subsidized multi-family  communities
    that are primarily located in the southern New England area.


2.  ACQUISITIONS AND CONSOLIDATION TRANSACTIONS

    On March 14,  1997,  the  Company  completed a series of  transactions  (the
    "Consolidation Transactions") that included the following:

    o   The   Company   formed  an   operating   partnership   (the   "Operating
        Partnership") to serve as the vehicle for the consolidation of ownership
        and control of the Company's operations and assets.

    o   Pursuant to an exchange offer, the Operating  Partnership purchased from
        non-affiliated  limited  partners  substantially  all of the outstanding
        partnership  interests  of  twenty  properties,   including  one  retail
        property ("Property Partnerships") in exchange for 1,205,324 partnership
        units (the "Common Units") of the Operating Partnership,  or, in certain
        circumstances,  cash.  Common Units are generally  exchangeable  for the
        Company's Common Shares on a one-for-one basis.

    o   Immediately prior to the consummation of the Consolidation Transactions,
        the Company declared a stock dividend  aggregating  26,250 Common Shares
        and concurrently  effected a stock split of 1.125-for-one  (collectively
        the  "Stock  Split"),  thereby  issuing  on a pro rata  basis a total of
        95,102  additional  Common  Shares  to the  holders  of the  issued  and
        outstanding Common Shares just prior to the Consolidation  Transactions.
        All outstanding Common Shares were retroactively adjusted to reflect the
        Stock Split.

    o   The Company issued  3,333,333 Common Shares to new equity investors (the
        "New  Equity  Investment")  in exchange  for $30 million  (approximately
        $27.5 million after costs of issuance).

    o   Pursuant  to  a  contribution  agreement  among  the  Company,   certain
        companies  and  individuals  affiliated  with the  Company  (the  "Grove
        Companies")  and the  Operating  Partnership,  substantially  all of the
        assets  and  operations,  the  management  services  division  of  Grove
        Property Services Limited Partnership and the Grove Companies' interests
        in the Property  Partnerships  were also  transferred  to the  Operating
        Partnership.

    o   In exchange for the above, the Grove Companies  received an aggregate of
        909,115 Common Units in the Operating  Partnership and a cash payment of
        $178,000 from the Company, and the Company received 620,102 Common Units
        in the Operating Partnership.  Additionally,  the Company contributed to
        the Operating  Partnership the net proceeds received from the New Equity
        Investment in exchange for 3,333,333 additional Common Units.

    o   In  connection  with  the  Consolidation  Transactions,   the  Operating
        Partnership entered into a three-year secured revolving  acquisition and
        working  capital  credit  facility of up to $25.0 million (the "Original
        Revolving  Credit  Facility") and a $15.1 million ten-year term mortgage
        loan (the "Mortgage Loan").

On June 1, 1997, the Company  acquired two related party  residential  apartment
complexes ("Four Winds" and "Brooksyde").  In addition,  the Company acquired an
interest  in  Windsor  Arbor  Limited  Partnership,  the owner of  River's  Bend
Apartments   ("Windsor   Arbor").   Upon   consummation  of  the  June  1,  1997
transactions,  the Operating  Partnership  issued an aggregate of 420,183 Common
Units valued at $10 per unit.  The Company also  assumed  mortgage  debt on Four
Winds and Brooksyde in the aggregate remaining principal amount of $6.2 million.
To complete  these  transactions,  the Company  borrowed  $1.8 million under its
Original Revolving Credit Facility.

On July 2, 1997, the Company acquired certain  condominium units  representing a
portion of the  condominium  units in the Greenfield  Village complex located in
Rocky Hill, Connecticut, from an unrelated party. The Company paid approximately
$4.3  million,  with proceeds from the Original  Revolving  Credit  Facility for
these units.





                                      F-9
<PAGE>






On  September  1, 1997,  the Company  acquired two  apartment  communities  from
related parties, Glastonbury Centre Apartments in Glastonbury,  Connecticut, and
Summit and Birch Hill in  Farmington,  Connecticut.  The  Operating  Partnership
issued 325,836  Common Units valued at $10.50 per unit,  assumed $9.8 million in
debt and drew down $750,000  against the Original  Revolving  Credit Facility to
acquire these properties.

On September 30, 1997, the Company  acquired the remaining  limited  partnership
interests  in Windsor  Arbor for $4.9 million  with  proceeds  from the Original
Revolving Credit Facility.

On October 31,  1997,  the Company  purchased  an  apartment  community  from an
unrelated  party in Ellington,  Connecticut  ("High  Meadow").  The $4.2 million
purchase price was paid utilizing borrowings under the Original Revolving Credit
Facility.

In addition,  on October 31, 1997,  the Company  acquired two retail  properties
from related parties.  These  acquisitions,  Cornerblock and the Wharf Building,
are  specialty  retail  properties  located in  Edgartown,  Massachusetts.  Upon
consummation of the Cornerblock and Wharf Building  transactions,  the Operating
Partnership  issued an aggregate of 143,334  Common Units valued at $10.50 each.
To complete these transactions,  the Company borrowed approximately $7.0 million
under the Original Revolving Credit Facility.

In November 1997, the Company completed the sale of 4,500,000 Common Shares (the
"November  1997  Offering").  The net proceeds from the sale after  underwriting
discounts and other costs were approximately $45.2 million. The Company used the
proceeds to pay off the Original  Revolving Credit Facility and certain mortgage
notes payable (see Notes 5 and 6) and for working capital purposes.

On December 1, 1997, the Company acquired an apartment complex from an unrelated
party in Ellington,  Connecticut,  ("Pinney Brook") for approximately  $950,000.
The purchase price was paid from working capital.

On December 31, 1997,  the Company  acquired  four  communities  from  unrelated
parties for approximately  $20.0 million.  The individual  communities are Briar
Knoll, Ribbon Mill, Hilltop and Spring Hill Commons and are located respectively
in Manchester,  Vernon and Norwich,  Connecticut, and Acton, Massachusetts.  The
purchase price was paid utilizing borrowings under the Original Revolving Credit
Facility and cash on hand.

On January 23, 1998, the Company  purchased an apartment  community,  Tanglewood
Apartments,  located in West Warwick, Rhode Island, from an unrelated party. The
purchase price of approximately $7.0 million was paid utilizing borrowings under
the Original Revolving Credit Facility.

On April 1, 1998, the Company purchased a specialty retail property in Freeport,
Maine, and an apartment community in Agawam, Massachusetts.  The retail property
includes a 25,000 square foot complex and was purchased for  approximately  $7.2
million.  The apartment  community  includes 88 units and was purchased  from an
affiliate of the Company for approximately $3.3 million. These acquisitions were
financed  through the  assumption of $6.8 million first  mortgages,  issuance of
5,818  Common  Units for  $0.06  million,  and  utilizing  borrowings  under the
Original Revolving Credit Facility.

On June 1,  1998,  the  Company  acquired  two  residential  properties  in East
Providence,  Rhode Island,  from an unrelated party. The purchase price of $19.4
million  was  financed  with the  assumption  of a $2.4  million  loan and $17.0
million from the new long-term mortgage financing described in Note 4.

On August 7, 1998,  the  Company  acquired  an  apartment  community  located in
Sturbridge,  Massachusetts,  for approximately $4.0 million.  The purchase price
was financed  with the  assumption  of a $2.4 million loan and $1.6 million from
the 1998 Credit Facility (as defined in Note 6).

On August 28, 1998, the Company acquired an apartment  community located in East
Haven,  Connecticut,  for  approximately  $4.5 million.  The purchase  price was
financed  with the  assumption  of a $2.9 million loan and $1.6 million from the
1998 Credit Facility.

On October 31, 1998, the Company  acquired 18 apartment  communities  located in
Greater  Boston,   Massachusetts,   from  an  unrelated   party.  The  Operating
Partnership  issued  919,009  Common Units as part of the purchase price for the
assets  acquired  from  the  McNeil  Partnership,  at $9.82  per unit for  $9.02
million,  assumed  $62.3  million in debt and drew down $18.75  million from the
1998 Credit Facility.  In connection with the McNeil Transaction,  certain other
debt obligations of the Company relate to this acquisition (see Note 7).

On October 31,  1998,  management  contracts  purchased in  connection  with the
McNeil Transaction were expensed (see Note 15).

On November  30, 1998 the Company  acquired an apartment  community,  Rockingham
Glen  Apartments,  located in West  Roxbury,  Massachusetts  , from an unrelated
party.  The Operating  Partnership  issued 104,525 Common Units valued at $10.40
per unit for $1.09  million,  assumed $4.4 million in mortgage debt and borrowed
$2.9 million under the 1998 Credit Facility.

As of December 31, 1998 for financial purposes the Company acquired an apartment
community, Highland Glen Apartments, located in Westwood, Massachusetts, from an
unrelated party. The Operating Partnership issued 23,091 Common Units as part of
the  purchase  price


                                      F-10
<PAGE>




for the assets  acquired  from the McNeil  Partnership,  at
$11.43 per unit for $0.26  million,  assumed $6.9  million in mortgage  debt and
drew down $0.5 million from the 1998 Credit  Facility.  In  connection  with the
McNeil Transaction, certain other debt obligations of the Company relate to this
acquisition (see Note 7).

The Company intends to continue to operate all of its  multi-family  communities
and retail commercial properties as rental properties.


3.  SIGNIFICANT ACCOUNTING POLICIES

    Basis of Presentation
    ---------------------
    The financial statements are presented on a consolidated basis.  Included in
    the  Company's  financial  statements  are  the  accounts  of the  Operating
    Partnership and various property  partnerships.  Properties are owned either
    directly  by the  Operating  Partnership  or are  owned by  various  limited
    partnerships or limited liability companies,  that in turn are substantially
    (89% to 99%) or wholly owned by the Operating  Partnership.  All significant
    intercompany transactions are eliminated in consolidation.

    Reclassification
    ----------------
    Certain  amounts in 1997 and 1996 were  reclassified  to conform to the 1998
    presentation.

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

    Cash and Cash Equivalents
    -------------------------
    The Company  considers all highly liquid debt  instruments  with an original
    maturity  of  three  months  or less  at the  time  of  purchase  to be cash
    equivalents.  The combined  account  balances at each financial  institution
    periodically exceed the Federal Depository  Insurance  Corporation  ("FDIC")
    insurance coverage and, as a result, there is a concentration of credit risk
    related to amounts on  deposit  in excess of FDIC  insurance  coverage.  The
    Company  believes  that the  risk is not  significant  since  its cash is on
    deposit with major financial institutions.

    Real Estate Asset Capitalization and Depreciation
    -------------------------------------------------
    Acquisitions  are  recorded  in  accordance  with  the  purchase  method  of
    accounting. Expenditures for long-lived replacement-type items in stabilized
    properties,  such  as  appliances  and  floor  coverings,  are  capitalized.
    Furthermore,  expenditures  for  non-recurring  items  under  $1,000 and for
    normal tenant turnover  expenses (such as cleaning and painting) and repairs
    and  maintenance  are  expensed as incurred.  With respect to  redevelopment
    properties,  the Company generally capitalizes all costs incurred throughout
    the redevelopment stage.

    Depreciation  is provided for building and land  improvements  and buildings
    using the straight-line method over the estimated useful lives of the assets
    (10 to 30  years).  Additionally,  furniture,  fixtures  and  equipment  are
    depreciated  using an accelerated  method over the estimated useful lives of
    the assets (5 to 7 years).

    Long-Lived Assets
    -----------------
    Statement of Financial  Accounting  Standards  No. 121,  Accounting  for the
    Impairment  of  Long-Lived  Assets and  Long-Lived  Assets to be Disposed of
    requires  long-lived  assets to be reviewed  for  impairment  when events or
    circumstances  indicate that an impairment  might exist.  When an impairment
    indicator  is present,  assets must be grouped at the lowest level for which
    there are identifiable cash flows. If the sum of the undiscounted cash flows
    is less than the carrying amounts of the assets,  an impairment loss must be
    recorded. The impairment loss is measured by comparing the fair value of the
    assets with their carrying  amount.  To date, no losses have been recognized
    and management believes that no impairment conditions exist.

    Per Share Data
    --------------
    In 1997, the Financial  Accounting Standards Board issued Statement No. 128,
    Earnings per Share ("Statement 128"). Statement 128 replaced the calculation
    of primary  and fully  diluted  earnings  per share  with basic and  diluted
    earnings per share.  Unlike primary  earnings per share,  basic earnings per
    share  excludes the dilutive  effects of options and warrants  (see Note 8).
    Earnings per share,  assuming  dilution,  is very  similar to fully  diluted
    earnings per share. All earnings per share amounts for all periods have been
    presented,  and where appropriate,  restated to conform to the Statement 128
    requirements.

    Income per common share  information is based on the weighted average number
    of Common Shares  outstanding  during each year.  On February 10, 1997,  the
    Board of Trust Managers of the Company declared a stock dividend aggregating
    26,250  Common Shares and the  concurrent  effectuation  of a  1.125-for-one
    common stock split.  All shares  outstanding and per share amounts have been
    restated to reflect these changes in capital structure.



                                      F-11
<PAGE>


    

    Stock-Based Compensation
    ------------------------
    The Company has adopted Financial  Accounting  Standard No. 123,  Accounting
    for  Stock-Based  Compensation.  This  statement  defines a fair value based
    method of accounting for employee stock compensation plans. However, it also
    allows an entity to continue to measure compensation cost for those plans in
    accordance with Accounting  Principle Board (APB) Opinion No. 25, Accounting
    for Stock Issued to Employees.  Under APB No. 25,  compensation  cost is the
    excess,  if any, of the quoted  market  price of the stock at the grant date
    over the amount the employee must pay to acquire the stock.  The Company has
    elected to continue to account for its  employee  stock  compensation  plans
    under APB No. 25. (See Note 8).

    Income Taxes and Dividends
    --------------------------
    The Company has made the  election to be taxed as a REIT under  Sections 856
    through 860 of the Internal Revenue Code of 1986, as amended.  To qualify as
    a REIT, the Company  generally  must  distribute at least 95% of its taxable
    income to its shareholders and comply with other requirements.  Accordingly,
    no provision  has been made for federal  income taxes for the Company in the
    accompanying  financial  statements.  Even though the Company  qualifies for
    taxation as a REIT,  the  Company may be subject to certain  state and local
    taxes on its income and property  and to federal  income and excise taxes on
    its  undistributed  income,  if any.  Shareholders  are  taxed on  dividends
    declared and must report such  dividends as either  ordinary  income,  short
    term gains,  long term gains, or as a return of capital.  The federal income
    tax characteristics of dividends paid by the Company consisted of:

                                      1998       1997      1996
                                      ----       ----      ----
            Ordinary income          86.17%    100.00%    97.46%
            Return of capital        13.83%      0.00%     2.54%

    No income taxes were paid during 1998, 1997 and 1996.

    Advertising
    -----------
    The Company expenses  advertising costs as incurred.  Advertising costs were
    $543,000, $214,000 and $24,000 in 1998, 1997 and 1996, respectively.


    Deferred Charges
    ----------------
    Deferred charges,  consisting  principally of loan costs, are amortized on a
    straight-line basis over the term of the related obligation. When term loans
    are retired  prior to  maturity,  the  unamortized  deferred  loan costs are
    written-off and reported as an extraordinary item.


    Revenue Recognition
    -------------------
    Rental income  attributable  to leases is recorded when due from tenants and
    recognized monthly as it is earned,  which is not materially  different than
    the straight-line basis. The Company generally requires tenants to provide a
    cash security deposit equal to one month's rent or pay the last month's rent
    in advance. Such payments are deferred and are included in security deposits
    on the accompanying consolidated balance sheets.


4.  PRO FORMA INFORMATION (UNAUDITED)

    In 1998, the  historical  consolidated  financial  statements of the Company
    contain  results  of  operations  data for the  properties  below from their
    respective dates of acquisition to December 31, 1998.

                                                                Effective
                                                             Acquisition Date
                                                             ----------------
     Tanglewood Village                                      January 23, 1998
     Freeport                                                   April 1, 1998
     Coachlight Village                                         April 1, 1998
     Winchester Park                                             June 1, 1998
     Winchester Wood                                             June 1, 1998
     Sturbridge Meadows                                        August 7, 1998
     Parkwood                                                 August 28, 1998
     McNeil Transaction (18 Properties)                      October 31, 1998
     McNeil Transaction - Rockingham Glen                   November 30, 1998
     McNeil Transaction - Highland Glen                     December 31, 1998

   The following unaudited pro forma information for the year ended December 31,
   1998, is presented as if the 1998 acquisitions  listed above had all occurred
   on January 1, 1998. The unaudited  information  does not purport to represent
   what the  Company's  results of  operations  would have actually been if such
   transactions,  in fact,  had occurred on January 1, 1998, nor does it purport
   to represent the results of operations for future periods.



                                      F-12
<PAGE>



                                                        (In thousands,
                                                      except share data)
   Revenues                                             $      57,953
                                                        ===============
   Income before minority interests                     $       1,389
                                                        ===============
   Net income                                           $         868
                                                        ===============
   Net income per common share - basic and diluted      $        0.10
                                                        ===============


5.  MORTGAGE NOTES PAYABLE

    Total  mortgage  notes payable of $162,141  includes a fair value step up of
    $9,421.  The  contractual  principal  amount  outstanding  of mortgage notes
    payable is  $152,720.  The $9,421 step up relates to $57,531 of above market
    interest rate mortgages,  which were assumed in connection with the purchase
    of the McNeil Portfolio.  The interest rates on the assumed debt are between
    7.46% and 12.47%.  The step up was computed  using the  Company's  estimated
    current  market  interest  rate of 7%.  The step up  amount is not the legal
    stipulated principal amount of the respective mortgage and accordingly, this
    increase does not increase the  contractual  obligation  of the Company.  If
    these  loans are paid off in  advance of their  maturity,  the amount of the
    related step up on the  consolidated  balance sheet will be accounted for as
    extraordinary income. (see Note 14 - Subsequent Event)

    On June 1, 1998,  the Company  obtained a $63.0  million  ten-year term loan
    with a lender.  The net  proceeds of the loan were used to repay an existing
    $15.0 million loan,  acquire two  properties  in East  Providence  for $17.0
    million  (see  Note 2),  pay down  $27.0  million  of the  Revolving  Credit
    Facility  and  the  remaining  amount  of  approximately  $3.0  million  was
    deposited  in  working  capital  reserves  or used  for  transaction  costs.
    Payments of  interest  only are due under the new $63.0  million  loan at an
    effective fixed interest rate of 6.71% and the loan matures in June 2008. As
    of December 31, 1998, the Company's  weighted  average  interest rate on its
    long-term debt is  approximately  7.75% and its weighted average maturity is
    approximately 11.2 years.

    As a result  of the $15.0  million  loan  repayment  and  retirement  of the
    Original  Revolving  Credit Facility (see Note 6), the Company incurred $0.2
    and $0.3  million,  respectively,  of expenses  related to the  write-off of
    unamortized finance costs. In addition, the Company incurred $0.7 million of
    expense in  connection  with the  breakage of certain  LIBOR swap  contracts
    related to the $15.0  million loan  repayment.  Accordingly,  the results of
    operations for the year ended December 31, 1998 reflect  approximately  $0.9
    million of extraordinary expenses (net of $0.3 million allocated to minority
    interests).

    Mortgage  notes  payable  consist  of  the  following  at  December  31  (in
    thousands):

                                                 1998              1997
                                                 ----              ----

      Amortizing first mortgage notes         $  95,141         $  14,373
      Interest only first mortgage notes         67,000            19,084
                                              ---------         ---------
                                              $ 162,141         $  33,457
                                              =========         =========

    The amortizing  first mortgage notes have fixed interest rates between 7.04%
    and  12.47%.  These  notes  mature  between  the years 2000 and 2031 and are
    collateralized  by  twenty-eight  of the properties with a carrying value of
    approximately  $144.8  million as of  December  31,  1998.  These  notes are
    partially  guaranteed by certain executive  officers and shareholders of the
    Company.

    There are two interest only first mortgage  notes.  One note has a principal
    balance of $4.0 million  requiring  monthly  payments of interest  only at a
    fixed rate of 7.00%, and matures in 2007. This note is collateralized by one
    property with a carrying value of approximately  $7.9 million as of December
    31, 1998. The other note has a principal  balance of $63.0 million requiring
    monthly  payments of interest  only at an effective  fixed  interest rate of
    6.71%  and  matures  in  2008.  This  note is  collateralized  by  seventeen
    properties with an aggregate  carrying value of approximately  $85.7 million
    as of December 31, 1998.

    Annual  principal  payments due as of December 31, 1998,  are as follows (in
    thousands):

                            Year Ending December 31,
                            ------------------------
                             1999         $  3,289
                             2000            5,345
                             2001            3,552
                             2002            3,723
                             2003            7,948
                             Thereafter    138,284
                                          --------
                                          $162,141
                                          ========



                                      F-13
<PAGE>



6.  REVOLVING CREDIT FACILITY

    In  March,  1997,  the  Operating  Partnership  entered  into  the  Original
    Revolving  Credit  Facility,  guaranteed  by the  Company  for  up to  $25.0
    million.  Borrowings  under the  Original  Revolving  Credit  Facility  were
    collateralized by thirteen  properties and interest was payable monthly at a
    floating rate of 1.5% above the 30, 60, or 90-day LIBOR rate.

    In  April  1998,  the  Operating  Partnership  entered  into a new  two-year
    Revolving  Credit  Facility (the "1998 Credit  Facility")  with its bank and
    retired the Original  Revolving  Credit  Facility.  The 1998 Credit Facility
    increased  the  availability  of the credit line to $50.0 million from $25.0
    million and converted the line to an unsecured line from a secured line. The
    1998 Credit  Facility bears interest  payable  monthly at a floating rate of
    1.5% above the 30, 60, or 90-day  LIBOR rate.  The 1998  Credit  Facility is
    available  to fund future  property  acquisitions  and up to $5.0 million is
    available to fund working  capital needs.  As of December 31, 1998, the 1998
    Credit Facility had $34.25 million outstanding. The Operating Partnership is
    required to meet certain  financial  covenants as defined in the 1998 Credit
    Facility agreement.


7.  ACQUSITION NOTES PAYABLE

    In conjunction with the purchase of the McNeil Portfolio, the Company agreed
    to issue additional Common Units and pay cash to certain continuing partners
    in the event that a McNeil Portfolio property was converted to a market rate
    property.  The Acquisition  Notes Payable are  obligations  related to three
    McNeil  Properties  (Rockingham  Glen, 929 House,  and Glen Meadow),  to pay
    additional  cash and issue  additional  Common Units when the properties are
    converted to market rate properties.  On November 30, 1998, the mortgages on
    two of the  properties  (Glen  Meadow and 929 House) were  modified to allow
    these  properties  to be converted to 80% market rate units and 20% moderate
    income units. The Rockingham Glen mortgage was modified in the third quarter
    of 1998 to allow this  property to be converted to 80% market rate units and
    20% moderate  income  units.  It is  anticipated  that  approximately  $12.0
    million of the  Acquisition  Notes  Payable  will be paid on April 30,  1999
    (consisting of approximately $4.4 million in cash and $7.6 million in Common
    Units).   The  remaining   balance  of  the  Acquisition  Notes  Payable  of
    approximately  $0.95 million is expected to be paid over a three-year period
    (consisting  of  approximately  $.2 million in cash and  approximately  $.75
    million in Common Units).  When the Common Units are issued, the Acquisition
    Notes  Payable  balance  will be reduced by the value of Common Units issued
    and the Company's  Minority  Interests will be increased by a  corresponding
    amount.


8.  SHAREHOLDERS' EQUITY

    The following table outlines the 1998 activity in the Operating  Partnership
    equity accounts:

<TABLE>
<CAPTION>

                                                                         Number of:
                                                                  -------------------------
                                                                                 Limited
                                                                   Company's    Partners
                                                                   Operating    Operating
                                                                  Partnership  Partnership
                                                                     Units        Units
                                                                     -----        -----
<S>                                                                 <C>                 <C>
      Outstanding at January 1, 1997                                620,102             0
      Consolidation Transactions in March 1997                            -             -
         New Equity Investment                                    3,333,333             -
         Transfer of property interests-Grove Companies                   -       909,115
         Transfer of property interests-non-affiliates                    -     1,205,324
      Proceeds from stock options in May 1997                           394             -
      June 1997 acquisitions                                              -       420,183
      September 1997 acquisitions                                         -       325,836
      October 1997 acquisitions                                           -       143,334
      The November 1997 Offering                                  4,500,000             -
      April 1998 acquisitions                                             -         5,818
      Common Units redeemed April 1998 through December 1998              -      (252,153)
      Common Units exchanged July 1998 through December 1998         35,307       (35,307)
      Common Shares repurchased  September 1998 through            (304,630)            -
        December 1998
      Executive stock grants - September 1998                        63,153             -
      Private placement to executive officers - November 1998       392,000             -
      October 1998 acquisitions                                           -       919,009
      November 1998 acquisitions                                          -       104,525
      December 1998 acquisitions                                                   23,091
                                                                  ------------ ------------
      Outstanding at December 31, 1998                            8,639,659     3,768,775
                                                                  ============ ============
         Ownership Percentage                                         69.6%         30.4%
                                                                  ============ ============
</TABLE>




                                      F-14
<PAGE>








    Income is allocated to the Minority  Interest in the  Operating  Partnership
    based  on  its  weighted  average  ownership  percentage  of  the  Operating
    Partnership  ("OP").  The  ownership  percentage is computed by dividing the
    weighted  average number of Common Units held by the Limited  Partners other
    than the Company ("Minority  Interest") by the total weighted average Common
    Units  outstanding.  Issuance of additional Common Shares in connection with
    requested  redemptions  of Common Units or  redemptions  of Common Units for
    cash changes the ownership  percentage of both the Minority Interest and the
    Company. Such transactions and the proceeds therefrom are treated as capital
    transactions and result in an allocation  between  Shareholders'  Equity and
    Minority  Interest  to account for the change in the  respective  percentage
    ownership of the underlying equity of the OP.

    A  Common  Unit and a  Common  Share  have  essentially  the  same  economic
    characteristics  as they effectively share equally in the net income or loss
    and distributions of the OP. Common Units generally may be redeemed for cash
    or, at the  election  of the  Company,  for Common  Shares on a  one-for-one
    basis, subject to certain adjustment provisions.

    Common Shares have been reserved for future issuance as follows:

             Common Units not owned by the Company         3,768,775
              (see above)
             Underwriters warrants (Note 9)                   47,248
             Stock options issued (Note 9)                 1,092,723
             Additional stock options issuable               475,000
                                                         ------------
                                                           5,383,746
                                                         ============


9.  WARRANTS AND STOCK OPTION PLANS

    In conjunction  with the Company's  initial public offering of Common Shares
    in 1994,  the  managing  underwriter  was  granted  Underwriter  Warrants to
    purchase 47,248 Common Shares.  The Underwriter  Warrants are exercisable at
    $11.31 per  Common  Share and expire in June  1999.  No  warrants  have been
    exercised as of December 31, 1998.

    The  Company  adopted a stock  option  plan in 1994 (the "1994  Plan") for a
    maximum of 118,120  Common Shares for key employees and  non-employee  Trust
    Managers of the  Company.  Options  are  granted at the market  price of the
    Company's Common Shares on the date of grant,  become exercisable ratably on
    each of the first  three  anniversaries  of the date of the grant and have a
    maximum  term of ten years.  At  December  31,  1996,  no  options  had been
    exercised.  In May 1997,  a Trust  Manager  exercised  options on 394 Common
    Shares.  In March 1997,  the Company  instituted an additional  stock option
    plan ("1996 Plan").  The Company  reserved a total of 900,000 Common Shares,
    subject to adjustment, pursuant to the 1996 Plan. In June, 1998, the Company
    amended the 1996 Plan by reserving an additional  500,000 Common Shares. The
    provisions of the 1996 Plan are similar to the 1994 Plan. The 1996 Plan also
    allows  awards to advisors and  consultants.  Pursuant to the  Consolidation
    Transactions and the November Offering,  the Company granted 810,000 options
    to certain executive officers, employees and non-employee Trust Managers and
    an additional 50,000 nonqualified options were granted to a Company advisor.
    Each  non-employee  Trust Manager  receives 10,000 options upon his original
    election to the Board and 5,000  options  each time he is  reelected  to the
    Board.  The  exercise  price of the options is between  $7.20 and $10.91 per
    share.

    Stock option activity is summarized as follows:
<TABLE>
<CAPTION>

                                                       1998                        1997
                                            --------------------------- ---------------------------
                                                            Weighted                    Weighted
                                                            Average                     Average
                                                            Exercise                    Exercise
                                              Options        Price         Options       Price
                                              -------        -----         -------       -----
<S>                                           <C>           <C>           <C>           <C>   
      Outstanding at beginning of year        977,723       $10.30        118,117       $ 8.48
      Granted                                 115,000       $10.26        860,000       $10.54
      Exercised                                     -       $    -           (394)      $ 7.73
                                            -------------               -------------
      Outstanding at end of year            1,092,723       $10.29        977,723       $10.30
                                            =============               =============
      Options exercisable at end of year      448,249       $10.05         69,296       $ 9.33
                                            =============               =============
</TABLE>

    The Company  accounts for stock option grants in accordance with APB No. 25.
    Accordingly,  no  compensation  cost has been  recognized  for stock  option
    grants  since all of the options  have  exercise  prices equal to the market
    value of the Company's Common Shares at the date they were granted.

    Pro  forma  information  regarding  net  income  and  earnings  per share is
    required  by FAS No.  123,  and has been  determined  as if the  Company had
    accounted for its employee  stock options under the fair value method of FAS
    No. 123. The fair value for these options was estimated at the date of grant
    using a  Black-Scholes  option pricing model with the following  assumptions
    for  1998:  risk-free  



                                      F-15
<PAGE>



    interest rate of 5%;  dividend  yields of 6.48%;  volatility  factors of the
    expected  market  price  of  the  Company's  Common  Shares  of  2.31  and a
    weighted-average expected life of the options of ten years.

    The Black-Scholes option valuation model was developed for use in estimating
    the fair value of traded options which have no vesting  restrictions and are
    fully transferable.  In addition,  option valuation models require the input
    of  highly  subjective   assumptions  including  the  expected  stock  price
    volatility.  The  Company's  employee  stock  options  have  characteristics
    significantly different from those of traded options;  furthermore,  changes
    in the subjective  input  assumptions  can materially  affect the fair value
    estimate.  Therefore,  in management's  opinion,  the existing models do not
    necessarily  provide a  reliable  single  measure  of the fair  value of its
    employee stock options.

    For  purposes  of pro forma  disclosures,  the  estimated  fair value of the
    options is  amortized  to expense  over the  options'  vesting  period.  The
    Company's pro forma information  follows (in thousands,  except for earnings
    per share information):

<TABLE>
<CAPTION>

                                                            Year Ended            Year Ended
                                                         December 31, 1998     December 31, 1997
                                                         -----------------     -----------------         
<S>                                                     <C>                    <C>        
      Pro forma (net loss) income                       $       (436)          $     2,221
                                                        =========================================

      Pro forma (net loss) income per share - basic
      and assuming dilution                             $       (.0$)          $      0.59
                                                        =========================================
</TABLE>


10.  RELATED PARTY TRANSACTIONS

    Management Fee
    --------------
    On June 23, 1994,  the Company  entered  into a  Management  Agreement ( the
    "Agreement" ) with Grove Property Services Limited  Partnership  ("GPS"), an
    affiliated company which provided operating and support functions  requisite
    to the operation of the Company's  properties.  The Agreement provided for a
    management fee equal to 5% of gross monthly  revenues,  as defined,  and was
    terminated  pursuant  to  the  Consolidation  Transactions  in  March  1997.
    Management  fees  incurred  in 1998,  1997 and 1996 were  approximately  $0,
    $22,000 and $109,000, respectively.

    Subsequent to the Consolidation  Transactions,  the Company earned revenues,
    through GPS, of  approximately  $477,100 in 1998,  and $518,013 in 1997,  by
    providing  management  services  to  affiliated  companies  not owned by the
    Company or the OP.

    Rent to Related Party
    ---------------------
    The Company's executive offices were leased from an affiliated company under
    a three year lease which  expired in 1997.  The lease has been extended on a
    month-to-month basis at a rate of $4,780 per month.

    Related party rent expense was approximately $79,000,  $41,000 and $6,000 in
    1998, 1997 and 1996, respectively.


11. FAIR VALUE OF FINANCIAL INSTRUMENTS

    The  following  disclosures  of  estimated  fair  value were  determined  by
    management  using available  market  information  and appropriate  valuation
    methodologies.  Judgment is necessary  to interpret  market data and develop
    estimated fair value.  Accordingly,  the estimates  presented herein are not
    necessarily   indicative  of  the  amounts  the  Company  could  realize  on
    disposition  of the  financial  instruments.  The  use of  different  market
    assumptions  and/or  estimation  methodologies may have a material effect on
    the estimated fair values.

    Cash equivalents, accounts receivable and accounts payable, because of their
    short-term nature,  approximate fair value. Mortgage notes payable, the 1998
    Credit Facility,  and Acquisition  Notes Payable are also carried at amounts
    that approximate their fair values.


12.  PENSION PLAN

    The Company sponsors a defined  contribution  pension plan (the "Plan") that
    is  qualified  under  Section  401(k)  of the  Internal  Revenue  Code.  New
    full-time  employees  are  eligible to join the Plan on the first day of the
    month following their 60-day waiting period.  Employee  contributions are in
    accordance with I.R.S.  guidelines;  the Company matches twenty-five percent
    of employee contributions up to one percent of the individual's total annual
    base salary. The Company's contribution vests over a term of 5 years.






                                      F-16
<PAGE>







13. COMMITMENTS AND CONTINGENCIES

    The Company, as an owner of real estate, is subject to various environmental
    and other laws of federal and local  governments.  Compliance by the Company
    with  existing laws has not had a material  adverse  effect on the Company's
    financial condition and results of operations.  However,  the Company cannot
    predict  the impact of new or changed  laws or  regulations  on its  current
    properties or on properties  that it may acquire in the future.  The Company
    is party to various  litigation  from time to time in the  normal  course of
    business.  Management believes that substantially all matters are covered by
    insurance  or,  in the  event of an  unfavorable  outcome,  would not have a
    material  adverse  effect on the Company's  financial  position,  results of
    operations or cash flows.

    In November 1998,  the Company  guaranteed up to $8.2 million of a bank loan
    to certain officers of the Company to be used by officers to purchase Common
    Shares. (See note 8)


14. SUBSEQUENT EVENT (UNAUDITED)

    On March 15, 1999 The Company  prepaid The Highland  Glen  mortgage  note of
    approximately $6.5 million.  This prepayment  transaction will result in the
    recognition  of  extraordinary  income  related  to debt  extinguishment  of
    approximately $0.35 million  (approximately $0.40 million fair value step up
    net of approximately $.05 million prepayment penalty).









                                      F-17
<PAGE>







15. QUARTERLY FINANCIAL DATA (UNAUDITED)


The following is a summary of selected  unaudited  quarterly  financial data (in
thousands, except per share data):

<TABLE>
<CAPTION>

                                          ---------------------------1998--------------------------------
                                          1st Quarter    2nd Quarter    3rd Quarter      4th Quarter
                                          January-March   April-June    July-September  October-December
                                          ---------------------------------------------------------------

<S>                                          <C>             <C>            <C>            <C>     
Revenues                                     $  7,588        $ 8,652        $  9,461       $ 13,131
                                          ===============================================================

Income before minority interests
  and Extraordinary expenses                 $  1,626        $ 1,790        $  1,733       $ (4,058)  (1)
Minority interests                               (439)          (478)           (444)         1,017
                                          ---------------------------------------------------------------
Income before extraordinary expenses            1,187          1,312           1,289         (3,041)
Extraordinary expenses related to debt
  Refinancing, net of minority
  interests                                         -           (838)              -            (50)
                                          ===============================================================
Net income (loss)                            $  1,187        $   474        $  1,289       $ (3,091)
                                          ===============================================================

Income before extraordinary expenses
  Per weighted average share-basic and  
   Assuming dilution                         $   0.14        $  0.16        $   0.15       $  (0.36)
Extraordinary expenses per
share-basic                                         -          (0.10)              -          (0.01)
  And assuming dilution
                                          ===============================================================
Net income per share-basic and
  Assuming dilution                          $   0.14        $  0.06        $   0.15       $  (0.37)
                                          ===============================================================

Weighted average common shares                  8,454          8,454           8,477          8,408
  Outstanding-basic
Effect of warrants and stock options               29              8               -             13
                                          ===============================================================
Weighted average common shares
  Outstanding-assuming dilution                 8,483          8,462           8,477          8,421
                                          ===============================================================
</TABLE>

(1) In conjunction  with the  acquisition of the McNeil  Portfolio,  the Company
paid  approximately  $5.6  million for the  purchase  of the related  management
contracts  from an unrelated  third party  management  company.  The term of the
contracts was for an average of approximately 20 years. The purchased  contracts
historically  produced gross annual revenue of  approximately  $1.6 million.  In
accordance  with  generally  accepted  accounting  principles,  the  cost of the
management  contracts has been expensed in the fourth  quarter of 1998, and as a
result there was a net loss for the quarter.

<TABLE>
<CAPTION>

                                          ---------------------------1997--------------------------------
                                           1st Quarter    2nd Quarter    3rd Quarter     4th Quarter
                                           January-March   April-June    July-September  October-December
                                          ---------------------------------------------------------------

<S>                                          <C>             <C>            <C>            <C>     
Revenues                                     $  1,306        $ 4,478        $  5,752       $  6,402
                                          ===============================================================

Income before minority interests             $    130        $   847        $    932       $  1,809
Minority interests                                (33)          (337)           (412)          (640)
                                          ---------------------------------------------------------------
Net income                                   $     97        $   510        $    520       $  1,169
                                          ===============================================================

Net income per weighted average
  Share-basic and assuming dilution          $   0.08        $  0.13        $   0.13       $   0.20
                                          ===============================================================
Weighted average common shares
  Outstanding                                   1,250          3,954           3,954          5,813
                                          ===============================================================
</TABLE>

The first three  quarters of 1997  earnings per share amounts have been restated
to comply  with  Statement  128.  Statement  128 had an  immaterial  impact with
respect to 1997 earnings per share.





                                      F-18
<PAGE>





16.  SEGMENT REPORTING

    The  Company's  reportable  segments  are  strategic  real  estate  types of
    investments.  They are  managed  separately  because  each real  estate type
    requires a different strategy.

    Prior to 1998 the Company  operated as one segment.  Accordingly,  only 1998
    segment reporting  information  is presented  below.  The  Company has three
    reportable segments;  residential,  subsidized residential,  and retail. The
    residential  segment  includes those properties that are rented to residents
    only for residential purposes.  The subsidized  residential segment includes
    properties that are used for residential purposes; however, these properties
    are  operating  and  receive   subsidization   according  to  HUD  and  MHFA
    guidelines.  The retail  segment  includes those  properties  whose space is
    rented for stores, restaurants, and other retail uses.

    The following table presents  information  about reported  segment profit or
    loss and segment  assets.  The Company  does not  allocate  income  taxes or
    unusual items to segments.  In addition,  not all segments have  significant
    noncash items other than  depreciation  and amortization in reporting profit
    or loss (dollars in thousands):


<TABLE>
<CAPTION>

                                                          Subsidized
                                          Residential     Residential      Retail      Total
                                          -----------     -----------      ------      -----
<S>                                       <C>             <C>             <C>         <C>     
    Revenues                              $    33,840     $     1,985     $ 2,422     $ 38,247
    Interest Expense                      $     4,464     $       409     $   463     $  5,336
    Depreciation and amortization         $     5,293     $       197     $   473     $  5,963
    Segment Profit                        $     7,053     $       592     $   825     $  8,470
    Extraordinary expense                 $     1,173     $         -     $    83     $  1,256
    Segment Assets                        $   239,505     $    56,298     $19,293     $315,096
    FFO                                   $    13,310     $       789     $ 1,370     $ 15,469
</TABLE>

    The accounting  policies of the segments are the same as those  described in
    the  summary of  significant  accounting  policies.  The  Company  evaluates
    performance based upon profit or loss from operations before income taxes.


    The following presentation of reconciliation of reportable segment revenues,
    profit or loss, and assets, to the Company's consolidated totals.

    Revenues:
    ---------

        Total revenues for reportable segments      $        38,247
        Other revenues                                          585
                                                    ---------------
        Total consolidated revenues                 $        38,832
                                                    ===============


    Profit or Loss
    --------------

        Total profit/loss for reportable segments   $         8,470
        Other profit or loss                         (        1,829)
        Unallocated amounts:
            Other corporate expenses                 (        5,550)
        Income before minority interest and         ---------------
            extraordinary items                     $         1,091
                                                    ===============


    Assets
    ------

        Total assets for reportable segments        $       315,096
        Other assets                                         12,019
        Other unallocated amounts                                 -
                                                    ---------------
        Total consolidated assets                         $ 327,115
                                                    ===============





                                      F-19
<PAGE>




    Other Significant Items
    -----------------------
                                         Segment                   Consolidated
                                          Totals     Non-segment      Totals
                                          ------     -----------      ------

       Interest expense                  $  5,336      $ 1,455        $6,791
       Depreciation and amortization     $  5,963      $   204        $6,167


17. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

    In June 1998, the FASB issued  Statement No. 133,  Accounting for Derivative
    Instruments  and Hedging  Activities.  The Company  expects to adopt the new
    Statement  effective January 1, 2000. The Statement will require the Company
    to recognize all derivatives on the balance sheet at fair value. The Company
    does  not  anticipate  that  the  adoption  of this  Statement  will  have a
    significant effect on its results of operations or financial position.




                                      F-20
<PAGE>





1998
SCHEDULE III
PART 1
REAL ESTATE AND ACCUMULATED DEPRECIATION

<TABLE>
<CAPTION>
                                                                                   Initial Cost
         Apartment Name          Location             Encumbrances           Land               Building
         --------------          --------             ------------           ----               --------
Connecticut
-----------
<S>                              <C>                <C>                 <C>                 <C>           
208-210 Main St                  Manchester         $             -     $    149,629        $      847,897
Arbor Commons                    Ellington                        -          164,946               934,695
Avon Place                       Avon                     6,342,236        1,095,513             6,207,906
Barons Apartments                Southington              1,228,545          162,696             1,445,468
Bradford Apartments              Newington                1,957,653          358,864             2,036,562
Briar Knoll Apts                 Vernon                           -          956,711             5,421,363
Brooksyde Apts                   West Hartford            1,937,190          467,829             2,651,030
Burgundy Studios                 Middletown               1,821,650          313,856             1,778,520
Cambridge Estates                Norwich        (A)       4,299,482          426,470             3,808,829
Colonial Village                 Plainville               3,584,186          604,027             3,422,818
Dogwood Hill                     Hamden                           -          170,942             1,680,865
Summit & Birch Hill              Farmington               7,286,123        1,432,693             8,118,593
Fox Hill Apartments              Enfield                  5,553,940        1,034,266             5,877,842
Fox Hill Commons                 Vernon                   2,195,541          395,047             2,238,597
Greenfield Village               Rocky Hill                       -          783,698             3,498,803
Hamden Centre                    Hamden                           -          160,185             1,607,407
High Meadow                      Ellington                        -          626,395             3,549,569
Hilltop                          Norwich                          -          777,880             4,407,984
Glastonbury Center               Glastonbury              4,358,292          793,383             4,497,538
Loomis Manor                     West Hartford            1,768,351          305,045             1,728,588
Ocean Reef                       New London     (A)       2,292,297          579,134             3,281,760
Park Place West                  West Hartford                    -          256,440             1,453,161
Parkwood                         East Haven               2,881,935          678,382             3,844,167
Sandalwood                       New London                       -          112,314               636,444
Ribbon Mill                      Manchester                       -          591,778             3,353,407
River's Bend                     Windsor                 12,389,455        2,244,296            12,909,411
Westwynd Apts                    West Hartford                    -          224,822             1,273,991
Woodbridge                       Newington                2,303,845          361,635             2,049,267

Maine
-----
Freeport Shops                   Freeport                         -        1,079,260             6,115,808

Massachusetts
-------------
929 House                        Cambridge                5,747,945        1,755,911             9,950,160
Abington Grove                   Abington                 2,080,225          490,465             2,779,304
Cedar Glen                       Reading                  3,628,455          597,351             3,384,992
Chestnut Glen                    Abington                 6,145,530        1,064,882             6,034,329
Coachlight Village               Agawam                   2,096,516          505,464             2,864,297
Conway Court                     Roslindale                 593,232           92,618               524,835
Cornerblock                      Edgartown                        -          272,295             1,543,005
Dean Estates                     Taunton        (A)       1,988,561          376,705             2,134,664
Four Winds                       Fall River               6,004,919        1,051,300             5,957,369
Glen Grove                       Wellesley                3,688,566          642,075             3,638,426
Glen Meadow                      Franklin                 2,884,277        1,070,881             6,068,322
Gosnold Grove                    East Falmouth              810,716          152,784               865,774
Highland Glen                    Westwood                 6,921,907        1,070,133             6,064,083
Longfellow Glen                  Sudbury                  7,493,105        1,118,731             6,339,476
Longmeadow Shops                 Longmeadow               4,000,000          976,373             5,532,783
Nehoiden Glen                    Needham                  1,275,377          215,233             1,219,652
Noonan Glen                      Winchester                 788,406          118,267               670,177
Norton Glen                      Norton                   7,323,665        1,094,229             6,200,631
Old Mill Glen                    Maynard                  3,092,940          468,084             2,651,256
Phillips Park                    Wellesley                3,343,113          875,667             4,962,113
Rockingham Glen                  West Roxbury             4,415,256        1,139,721             6,458,416
Security Manor                   Westfield                1,443,634          348,661             1,999,499
Sturbridge Meadows               Sturbridge               2,411,691          625,710             3,545,687
Summerhill Glen                  Maynard                  2,504,099          337,834             1,914,392
Van Deene Manor                  West Springfield         3,071,031          585,049             3,360,177
Village Arms                     Acton                            -          806,777             4,571,736
Webster Green                    Needham                  4,703,108        1,654,299             9,374,358
Westwood Glen                    Westwood                 3,467,667        1,301,329             7,374,194
The Wharf                        Edgartown                        -          387,888             2,198,032
Wilkins Glen                     Medfield                 2,396,514          398,911             2,260,494

Rhode Island
------------
Dean Estates II                  Cranston                 1,225,289          253,198             1,434,786
Royale                           Cranston                 2,018,441          342,607             1,941,439
Tanglewood                       West Warwick                     -        1,048,689             5,942,569
Winchester Park                  East Providence                  -        2,200,003            12,466,684
Winchester Woods                 East Providence          2,375,991          694,825             3,937,343
                                                    ----------------    -------------       ---------------
                                                    $   162,140,897     $ 43,443,085        $  248,843,744
                                                    ================    =============       ===============
</TABLE>

(A) - One of three properties that secure one of the Company's  amortizing first
      mortgage notes






                                      F-21
<PAGE>




1998
SCHEDULE III
PART 1
REAL ESTATE AND ACCUMULATED DEPRECIATION

<TABLE>
<CAPTION>

                                         Costs Capitalized               Gross Carrying Amount at
                                     Subsequent to Acquisition              Close of Period (B)
Apt Name                               Land          Building             Land            Building      Accum. Depr.
--------                               ----          --------             ----            --------      ------------

Connecticut
-----------

<S>                                <C>            <C>               <C>               <C>              <C>       
208-210 Main St                    $    48,185    $    310,402      $       197,814   $   1,158,299    $   52,984
Arbor Commons                           44,382         283,760             209,328        1,218,455        58,636
Avon Place                           1,403,531          81,757           2,499,044        6,289,663       397,857
Barons Apartments                          126          55,636             162,822        1,501,104       295,269
Bradford Apartments                     86,452         565,142             445,316        2,601,704       129,433
Briar Knoll Apts                         6,940         196,751             963,651        5,618,114       186,718
Brooksyde Apts                           4,866         469,323             472,695        3,120,353       167,132
Burgundy Studios                        91,617         598,744             405,473        2,377,264       118,363
Cambridge Estates                          331         107,735             426,801        3,916,564       415,566
Colonial Village                        85,062         597,516             689,089        4,020,334       218,855
Dogwood Hills                              133          11,835             171,075        1,692,700       433,828
Summit & Birch Hill                     32,374         355,155           1,465,067        8,473,748       374,337
Fox Hill Apartments                    223,785       1,306,731           1,258,051        7,184,573       377,181
Fox Hill Commons                        96,713         625,310             491,760        2,863,907       141,304
Greenfield Village                      83,720         807,273             867,418        4,306,076       201,254
Hamden Centre                              124          99,802             160,309        1,707,209       369,965
High Meadow                            152,919       1,060,556             779,314        4,610,125       173,660
Hilltop                                  7,358         215,942             785,238        4,623,926       153,727
Glastonbury Center                      24,360         277,730             817,743        4,775,268       209,611
Loomis Manor                            90,779         568,313             395,824        2,296,901       119,276
Ocean Reef                             186,554       1,399,915             765,688        4,681,675       221,093
Park Place West                         85,034         498,511             341,474        1,951,672        89,646
Parkwood                                   527          36,296             678,909        3,880,463        43,125
Sandalwood                              40,573         235,596             152,887          872,040        39,144
Ribbon Mill                              5,463         512,836             597,241        3,866,243       121,725
River's Bend                            58,812         457,469           2,303,108       13,366,880       553,037
Westwynd Apts                           52,889         315,630             277,711        1,589,621        76,452
Woodbridge                             142,960         903,548             504,595        2,952,815       132,429

Maine
-----
Freeport Shops                             838          11,621           1,080,098        6,127,429       153,033

Massachusetts
-------------
929 House                                1,363          75,889           1,757,274       10,026,049        55,635
Abington Grove                             381           8,272             490,846        2,787,576        18,089
Cedar Glen                                 464          10,051             597,815        3,395,043        19,123
Chestnut Glen                              827           7,335           1,065,709        6,041,664        34,289
Coachlight Village                         392          19,445             505,856        2,883,742        72,196
Conway Court                                72             441              92,690          525,276         2,925
Cornerblock                                499          17,220             272,794        1,560,225        60,611
Dean Estates                            46,238         295,561             422,943        2,430,225       132,439
Four Winds                               8,735         207,671           1,060,035        6,165,040       325,415
Glen Grove                                 498           3,748             642,573        3,642,174        16,101
Glen Meadow                                831           5,095           1,071,712        6,073,417        33,816
Gosnold Grove                              119             727             152,903          866,501         4,825
Highland Glen                              831           5,091           1,070,964        6,069,174           103
Longfellow Glen                            868           9,966           1,119,599        6,349,442        35,983
Longmeadow Shops                       243,153       1,474,210           1,219,526        7,006,993       341,965
Nehoiden Glen                              167           1,024             215,400        1,220,676         6,817
Noonan Glen                                 92             563             118,359          670,740         2,823
Norton Glen                                849         293,363           1,095,078        6,493,994        36,257
Old Mill Glen                              363           2,226             468,447        2,653,482        14,774
Phillips Park                              680          14,761             876,347        4,976,874        30,052
Rockingham Glen                            885         294,417           1,140,606        6,752,833        18,560
Security Manor                          80,267         484,062             428,928        2,483,561       127,958
Sturbridge Meadows                         486          89,469             626,196        3,635,156        50,202
Summerhill Glen                            262           2,093             338,096        1,916,485        10,672
Van Deene Manor                        136,897         805,388             721,946        4,165,565       216,032
Village Arms                            37,178         738,877             843,955        5,310,613       168,861
Webster Green                            1,284          29,860           1,655,583        9,404,218        52,511
Westwood Glen                            1,010         396,334           1,302,339        7,770,528        43,265
The Wharf                                3,877          45,670             391,765        2,243,702        87,183
Wilkins Glen                               310           4,951             399,221        2,265,445        12,632

Rhode Island
------------
Dean Estates II                         51,728         335,139             304,926        1,769,925        90,853
Royale                                  82,329         517,679             424,936        2,459,118       123,523
Tanglewood                                 814         368,655           1,049,503        6,311,224       186,889
Winchester Park                          1,708         285,594           2,201,711       12,752,278       247,680
Winchester Wood                            539          21,965             695,364        3,959,308        77,098
                                   ------------   -------------     ---------------   --------------   ----------

       Totals:                     $ 3,764,401    $ 19,839,647      $   47,207,486    $ 268,683,391    $8,782,797
                                                                                      
                                   ============   =============     ===============   ==============   ==========
</TABLE>


(B) -- The  aggregate  cost  of  land and  buildings as of December 31, 1998 was
       $242,166,589 for Federal income tax purposes






                                      F-22
<PAGE>



1998
SCHEDULE III (CONTINUED)
PART 1
REAL ESTATE AND ACCUMULATED DEPRECIATION

                                            Date                     Estimated
Apt Name                  Constructed     Renovated     Acquired    Life (Years)
--------                  -----------     ---------     --------    ------------
Connecticut
-----------
208-210 Main St               1969          1988          1997        10 to 30
Arbor Commons                 1975          1988          1997        10 to 30
Avon Place                    1973          1995          1997        10 to 30
Barons Apartments             1970          1994          1994        10 to 30
Bradford Apartments           1964          1989          1997        10 to 30
Briar Knoll Apts              1986             -          1997        10 to 30
Brooksyde Apts                1945          1997          1997        10 to 30
Burgundy Studios              1973          1996          1997        10 to 30
Cambridge Estates             1977          1990          1996        10 to 30
Colonial Village              1968          1989          1997        10 to 30
Dogwood Hill                  1971          1993          1994        10 to 30
Summit & Birch Hill           1967          1996          1997        10 to 30
Fox Hill Apartments           1974          1991          1997        10 to 30
Fox Hill Commons              1965          1989          1997        10 to 30
Greenfield Village            1965          1997          1997        10 to 30
Hamden Centre                 1968          1993          1994        10 to 30
High Meadow                   1975             -          1997        10 to 30
Hilltop                       1987             -          1997        10 to 30
Glastonbury Center            1962          1989          1997        10 to 30
Loomis Manor                  1948          1990          1997        10 to 30
Ocean Reef                    1962          1995          1997        10 to 30
Park Place West               1961          1989          1997        10 to 30
Parkwood                      1975             -          1998        10 to 30
Sandalwood                    1977          1996          1997        10 to 30
Ribbon Mill                   1908          1985          1997        10 to 30
River's Bend                  1973          1996          1997        10 to 30
Westwynd Apts                 1969          1990          1997        10 to 30
Woodbridge                    1968          1991          1997        10 to 30

Maine
-----
Freeport Shops                1985             -          1998        10 to 30

Massachusetts
-------------
929 House                     1975             -          1998        10 to 30
Abington Grove                1968             -          1998        10 to 30
Cedar Glen                    1980             -          1998        10 to 30
Chestnut Glen                 1983             -          1998        10 to 30
Coachlight Village            1967          1994          1998        10 to 30
Conway Court                  1920             -          1998        10 to 30
Cornerblock                  1800's         1988          1997        10 to 30
Dean Estates                  1984             -          1997        10 to 30
Four Winds                    1987          1996          1997        10 to 30
Glen Grove                    1979             -          1998        10 to 30
Glen Meadow                   1971             -          1998        10 to 30
Gosnold Grove                 1978             -          1998        10 to 30
Highland Glen                 1979             -          1998        10 to 30
Longfellow Glen               1984             -          1998        10 to 30
Longmeadow Shops              1962          1978          1997        10 to 30
Nehoiden Glen                 1978             -          1998        10 to 30
Noonan Glen                   1983             -          1998        10 to 30
Norton Glen                   1983             -          1998        10 to 30
Old Mill Glen                 1983             -          1998        10 to 30
Phillips Park                 1988             -          1998        10 to 30
Rockingham Glen               1974             -          1998        10 to 30
Security Manor                1971          1988          1997        10 to 30
Sturbridge Meadows            1985          1998          1998        10 to 30
Summerhill Glen               1980             -          1998        10 to 30
Van Deene Manor               1970          1990          1997        10 to 30
Village Arms                  1973          1998          1997        10 to 30
Webster Green                 1985             -          1998        10 to 30
Westwood Glen                 1972             -          1998        10 to 30
The Wharf                    1800's         1996          1997        10 to 30
Wilkins Glen                  1975             -          1998        10 to 30

Rhode Island
------------
Dean Estates II               1970          1994          1997        10 to 30
Royale                        1976          1993          1997        10 to 30
Tanglewood                    1973          1998          1998        10 to 30
Winchester Park               1972          1998          1998        10 to 30
Winchester Wood               1989          1998          1998        10 to 30





                                      F-23
<PAGE>




SCHEDULE III
PART II
ROLLFORWARD OF ASSETS AND ACCUMULATED DEPRECIATION

                                                             Years
                                                           ---------
Land, buildings and related improvements                    10 to 30
Furniture, fixtures and equipment                            5 to 7

The changes in total real estate assets for the
  years ended December 31 are as follows (in
  thousands):
                                                   1998        1997       1996
                                                -------------------------------
           Balance, beginning of year            $146,815    $  9,448    $5,153
           New property acquisitions              166,268     136,321     4,279
           Additions                                2,808       1,046        16
                                                -------------------------------
           Balance, end of year                  $315,891    $146,815    $9,448
                                                ===============================


The changes in accumulated depreciation for the years ended December 31
     are as follows (in thousands):
                                                   1998        1997       1996
                                                -------------------------------
           Balance, beginning of year            $  3,154    $    867    $  559
           Depreciation                             5,629       2,287       308
           expense
                                                -------------------------------
           Balance, end of year                  $  8,783    $  3,154    $  867
                                                ===============================





                                      F-24
<PAGE>






EXHIBIT INDEX:


   EXHIBIT NO.                           DESCRIPTION

       2.1         Contribution  Agreement,  dated  as of May 30,  1997,  by and
                   between Grove Operating, L.P., Northeast Apartments I Limited
                   Partnership,   West  Hartford   Center   Associated   Limited
                   Partnership,  Windsor Equity  Partnership and Windsor Commons
                   Corporation  (incorporated by reference to Exhibit 2.1 to the
                   Company's  Current  Report  on Form 8-K  dated  May 30,  1997
                   (Commission File No. 1-13080))

       2.2         Form of  First  Amendment  effective  as of  June 1,  1997 to
                   Agreement of Limited  Partnership  of Windsor  Arbor  Limited
                   Partnership  (incorporated by reference to Exhibit 2.2 to the
                   Company's  Current  Report  on Form 8-K  dated  May 30,  1997
                   (Commission File No. 1-13080))

       2.3         Purchase  and Sale  Agreement,  dated May 14,  1997,  between
                   Highland  Income  Partners,   L.P.,  as  Seller,   and  Grove
                   Corporation,   a  Purchaser  (incorporated  by  reference  to
                   Exhibit 2.1 to the Company's Current Report on Form 8-K dated
                   July 2, 1997 (Commission File No. 1-13080))

       2.4         Purchase and Sale Agreement,  dated September 5, 1997, by and
                   between Werner O. Kunzli, as Seller, and Grove Corporation, a
                   Purchaser  (incorporated  by  reference to Exhibit 2.4 to the
                   Company's Registration Statement on Form S-2, No. 333-38183)

       2.5         Grove Operating,  L.P.,  Solicitation of Consent and Offer to
                   Exchange  Certain  Outstanding  Units of Limited  Partnership
                   Interest in Grove-Coastal Associates,  L.P. for Consideration
                   of 3,435.5  Common  Units of Grove  Operating,  L.P.  with an
                   option to  holders  to instead  receive  cash  consideration,
                   dated June 19, 1997, as  supplemented  on June 19, 1997,  and
                   Letter of  Transmittal  and Addendum to Letter of Transmittal
                   in connection therewith (incorporated by reference to Exhibit
                   2.5 to the Company's  Registration Statement on Form S-2, No.
                   333-38183)

       2.6         Agreement  dated  as  of  April  22,  1998  among  The  Grove
                   Corporation   and   the   twenty-two   limited   partnerships
                   identified on Schedule 1 thereto  (incorporated  by reference
                   to Exhibit 2.1 to the  Company's  Current  Report on Form 8-K
                   dated October 30, 1998 (Commission File No. 1-13080))

       2.7         Amendment dated as of August 31, 1998 to Conveyance Agreement
                   dated as of April 22,  1998 among The Grove  Corporation  and
                   the twenty-two limited partnerships  identified on Schedule 1
                   thereto  (incorporated  by  reference  to Exhibit  2.2 to the
                   Company's  Current  Report on Form 8-K dated October 30, 1998
                   (Commission File No. 1-13080))

       3.1         Third  Amended  and  Restated  Declaration  of  Trust  of the
                   Company   dated  March  14,  1997,  as  amended  by  Articles
                   Supplementary  dated  October  23,  1997 and by  Articles  of
                   Amendment dated June 30, 1998  (incorporated  by reference to
                   Exhibit 3.0 to the  Company's  Quarterly  Report on Form 10-Q
                   for the  period  ended  June 30,  1998  (Commission  File No.
                   1-123080))

       3.2         Amended and Restated Bylaws of the Company  (incorporated  by
                   reference to Exhibit 3.2 to the Company's  Current  Report on
                   Form 8-K dated  March  14,  1997 and  filed  March  31,  1997
                   (Commission File No. 1-13080))

       4.1         Form of Agreement of Limited  Partnership of Grove Operating,
                   L.P.,  among the Company and the other partners named therein
                   (incorporated  by reference to Exhibit 10.2 to the  Company's
                   Current   Report  on  Form  8-K  dated   February   13,  1997
                   (Commission File No. 1-13080))

       4.2         Revolving Credit  Agreement among Grove Operating,  L.P., and
                   Rhode Island  Hospital  Trust National Bank (a Bank of Boston
                   company)  and Other  Banks  which may  become  parties to the
                   Agreement and Rhode Island  Hospital  Trust National Bank, as
                   Agent BancBoston Securities, Inc. As Arranger Dated April 30,
                   1998  (incorporated  by  reference  to  Exhibit  4.1  to  the
                   Company's Quarterly Report on Form 10-Q for the quarter ended
                   June 30, 1998 (Commisssion File No. 1-13080))

       4.3         Amendment to the  Agreement of Limited  Partnership  of Grove
                   Operating,  L.P.  among the  Company  and the other  partners
                   named  therein  (incorporated  by reference to Exhibit 4.3 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.1         Securities  Purchase  Agreement,  dated   February  20, 1997,
                   between   the  Company   and   Morgan   Stanley   Group  Inc.
                   (incorporated  by  reference to Exhibit 10.1 to the Company's
                   Current Report on Form 8-K  dated March 14, 1997  (Commission
                   File No. 1-13080))


<PAGE>




      10.2         Securities  Purchase  Agreement,  dated  February  21,  1997,
                   between  the  Company  and  ABKB/LaSalle  Securities  Limited
                   (incorporated  by reference to Exhibit 10.2 to the  Company's
                   Current  Report on Form 8-K dated March 14, 1997  (Commission
                   File No. 1-13080))

      10.3         Form of  Securities  Purchase  Agreement  executed  by  other
                   Investors in the Private Placement (incorporated by reference
                   to Exhibit 10.3 to the Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.4         Registration Rights Agreement,  dated March 14, 1997, between
                   the Company and the Investors  (incorporated  by reference to
                   Exhibit  10.4 to the  Company's  Current  Report  on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.5         Registration Rights Agreement,  dated March 14, 1997, between
                   the Company,  Grove  Operating,  L.P. and certain partners of
                   Grove Operating,  L.P.  (incorporated by reference to Exhibit
                   10.9 to the Company's  Current Report on Form 8-K dated March
                   14, 1997 (Commission File No. 1-13080))

      10.6         1994 Share Option Plan (incorporated by reference to  Exhibit
                   10.16 to the  Company's  Registration  Statement on Form SB-2
                   (File No. 33-76732))

      10.7         1996 Share  Incentive  Plan of Grove  Property  Trust,  Grove
                   Operating LP and Property  Partnerships,  as amended to March
                   11,  1998  (incorporated  by  reference  to Appendix A to the
                   Company's  Notice of Annual Meeting and Proxy Statement dated
                   April 30, 1998 (Commission File No. 1-13080))

      10.8         Noncompetition  Agreement,  dated March 14,  1997,  among the
                   Company,  Grove  Operating,  L.P.,  National  Realty Services
                   Limited  Partnership,  GIG and  Burgundy  Associates  Limited
                   Partnership  (incorporated  by reference to Exhibit  10.12 to
                   the Company's Current Report on Form 8-K dated March 14, 1997
                   (Commission File No. 1-13080))

      10.9         Form of  Noncompetition  Agreement  executed by each of Damon
                   Navarro, Brian Navarro,  Joseph LaBrosse,  Edmund Navarro and
                   Gerald McNamara  (incorporated  by reference to Exhibit 10.13
                   to the Company's  Current  Report on Form 8-K dated March 14,
                   1997 (Commission File No. 1-13080))

      10.10        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Damon Navarro  (incorporated by reference to Exhibit 10.15 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.11        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Brian Navarro  (incorporated by reference to Exhibit 10.16 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.12        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Edmund Navarro (incorporated by reference to Exhibit 10.17 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.13        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Joseph LaBrosse  (incorporated  by reference to Exhibit 10.18
                   of the  Company's  Registration  Statement  on Form S-2,  No.
                   333-38183)

      10.14        Amendment,  dated as of October 15, 1997,  to  Noncompetition
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Gerald McNamara  (incorporated  by reference to Exhibit 10.19
                   of the  Company's  Registration  Statement  on Form S-2,  No.
                   333-38183)

      10.15        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company  and Damon  Navarro  (incorporated  by  reference  to
                   Exhibit  10.14 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.16        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Damon Navarro  (incorporated by reference to Exhibit 10.21 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.17        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company  and Brian  Navarro  (incorporated  by  reference  to
                   Exhibit  10.15 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))


<PAGE>




      10.18        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Brian Navarro  (incorporated by reference to Exhibit 10.23 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.19        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company and Edmund  Navarro  (incorporated  by  reference  to
                   Exhibit  10.16 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.20        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Edmund Navarro (incorporated by reference to Exhibit 10.25 of
                   the  Company's   Registration  Statement  on  Form  S-2,  No.
                   333-38183)

      10.21        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company and Joseph  LaBrosse  (incorporated  by  reference to
                   Exhibit  10.17 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.22        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Joseph LaBrosse  (incorporated  by reference to Exhibit 10.27
                   of the  Company's  Registration  Statement  on Form S-2,  No.
                   333-38183)

      10.23        Employment  Agreement,  dated  March 14,  1997,  between  the
                   Company and Gerald  McNamara  (incorporated  by  reference to
                   Exhibit  10.18 to the  Company's  Current  Report on Form 8-K
                   dated March 14, 1997 (Commission File No. 1-13080))

      10.24        Amendment,  dated  as of  October  15,  1997,  to  Employment
                   Agreement,  dated  March 14,  1997,  between  the Company and
                   Gerald McNamara  (incorporated  by reference to Exhibit 10.29
                   of the  Company's  Registration  Statement  on Form S-2,  No.
                   333-38183)

      10.25        Form  of  Contribution  Agreement  among  the  Company, Grove
                   Operating, L.P. and certain  other parties  (incorporated  by
                   reference to Exhibit 10.1 to the Company's Current  Report on
                   Form  8-K  dated February  13,  1997   (Commission  File  No.
                   1-13080))

      10.26        Form of Indemnification Agreement by and between the Company,
                   the Trust Managers and each of Damon Navarro,  Brian Navarro,
                   Edmund  Navarro,   Joseph   LaBrosse,   and  Gerald  McNamara
                   (incorporated  by reference to Exhibit 10.18 to the Company's
                   Registration Statement on Form SB-2 (No. 33-76732))

      10.27        Assumption of Mortgage Deed and Security  Agreement made June
                   23, 1994 by and among Southington Baron Limited  Partnership,
                   Charles  D.  Gersten,  Ada C  Berin,  the  Company,  Damon D.
                   Navarro and Brian A.  Navarro  (incorporated  by reference to
                   Exhibit 10.22 to the  Company's  Annual Report on Form 10-KSB
                   for the year ended  December  31, 1994  (Commission  File No.
                   1-13080))

      10.28        Mortgage Note from Southington  Baron Limited  Partnership to
                   Charles  D.  Gersten  and Ada C.  Berin  dated  June 8,  1994
                   (incorporated  by reference to Exhibit 10.23 to the Company's
                   Annual Report on Form 10-KSB for the year ended  December 31,
                   1994 (Commission File No. 1-13080))

      10.29        Purchase  and Sale  Agreement  between  the Company and Grove
                   Cambridge  Associates  Limited  Partnership  (incorporated by
                   reference  to Exhibit 1 to the  Company's  Current  Report on
                   Form  8-K  dated  October  30,  1995   (Commission  File  No.
                   1-13080))

      10.30        Mortgage  Note  from  the  Company  to  First  Union  Bank of
                   Connecticut dated January 11, 1996 (incorporated by reference
                   to  Exhibit  10.25 to the  Company's  Annual  Report  on Form
                   10-KSB for the year ended December 31, 1995  (Commission File
                   No. 1-13080))

      10.31        Unlimited Guaranty among Grove Property Trust and Bankboston,
                   N.A. dated November 6, 1998

       21          List of Subsidiaries

       23          Consent of Ernst & Young, LLP

       27          Financial Data Schedule