U.S. SECURITIES AND EXCHANGE COMMISSION     Exhibit Index
                             Washington, D.C. 20549                on Page E-1
                                   FORM 10-KSB                     


                 [X]ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                  For the fiscial year ended December 31, 1996

                           Commission file No. 1-13080

                              GROVE PROPERTY TRUST
                 (Name of Small Business Issuer in Its Charter)

                Maryland                                         06-1391084
  (State of Incorporation or Organization)  (I.R.S. Employer Identification No.)

598 Asylum Avenue, Hartford, Connecticut                      06105
 (Address of Principal Executive Offices)                  (Zip Code)

                                 (860) 520-4789
                           (Issuer's Telephone Number)

                          GROVE REAL ESTATE ASSET TRUST
                                  (Former Name)

        Securities registered under Section 12(b) ofthe Exchange Act:NONE

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

       Securities registered under Section 12(g) of the Exchange Act: None

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

Check if there is no disclosure of delinquent  filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure  will be contained,  to
the  best  of  registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part III of this Form  10-KSB or any
amendment to this Form 10-KSB. __

The issuer's revenues for the 1996 fiscal year were $2,082,239.

The aggregate  market value of voting stock held by  non-affiliates  as of March
14, 1997 was $38,981,458.

The number of Common Shares of Beneficial  Interest  outstanding as of March 14,
1997 was 3,953,463.

                      DOCUMENTS INCORPORATED BY REFERENCE:
       Definitive proxy statement for 1997 Annual Meeting of Shareholders
                            - Part III of Form 10-KSB







PART I

Item 1.  Business

Introduction

Grove  Property  Trust  (formerly  Grove Real Estate Asset Trust,  "GREAT") (the
"Company") is a  self-administered  real estate investment trust ("REIT") formed
pursuant  to  the  Maryland  Real  Estate  Investment  Trust  Act,  engaging  in
multifamily property management, acquisition and redevelopment. Since the end of
1996,  the  Company  has  undergone  significant  changes  in its  business  and
operations,  as described below under "Consolidation  Transactions," in order to
seek to maximize future growth potential.

The Company  owned and operated  three  multifamily  properties  (the  "Original
Properties") since its inception and acquired a fourth property ("Cambridge") in
January of 1996 (collectively, the "GREAT Properties"). The GREAT Properties are
comprised of the Dogwood Hills  Apartments  comprising 46 multifamily  apartment
homes on Evergreen Avenue in Hamden,  Connecticut,  the Hamden Center Apartments
comprising  65  multifamily   apartment   homes  on  School  Street  in  Hamden,
Connecticut,  the Baron Apartments  comprising 54 multifamily apartment homes on
Queen Street in Southington,  Connecticut,  and Cambridge Estates, comprising 92
multifamily  apartment  homes  located  in  Norwich,   Connecticut.   The  GREAT
Properties  had an aggregate  weighted  average  occupancy  rate of 97.6% during
1996.

The Company was formed in 1994 to continue the multifamily property acquisition,
management  and  marketing   operations  and  related  business  objectives  and
strategies of Grove Investment  Group,  Inc., a Southern New England real estate
company  formed  in 1980 by Damon  and  Brian  Navarro,  and the  three  limited
partnerships  from which the  Company  acquired  the  Original  Properties  upon
completion of the Company's initial public offering in June 1994.

Consolidation Transactions

On March 14,  1997,  the  Company  completed  the  "Consolidation  Transactions"
described below. As a result of the Consolidation  Transactions,  the Company is
now a  self-administered  and self-managed REIT which management  believes to be
one of the largest  public  owners of  multi-family  residential  properties  in
Southern  New  England.  The  Company  is the  sole  general  partner  of  Grove
Operating,   L.P.  (the  "Operating   Partnership"),   a  newly  formed  limited
partnership  organized in Delaware.  The Operating Partnership was formed to act
as the  vehicle for the  Consolidation  Transactions  and is the entity  through
which the Company  conducts  substantially  all of its business and owns (either
directly or  indirectly  through  subsidiaries)  all of its assets.  The Company
currently holds approximately 66% of the Operating Partnership partnership units
(the "Common  Units").  This  structure  is commonly  referred to as an umbrella
partnership  REIT or  UPREIT.  The  Operating  Partnership  is  governed  by the
Operating Partnership Agreement.

The Company  owns,  directly or  indirectly,  100% of the  interests in the four
GREAT Properties and in each of eight  properties  acquired from certain limited
partnerships  through  the  Consolidation  Transactions.  Further,  the  Company
controls twelve additional properties as general partner or through ownership of
100%  of  the  general  partner  of  the  limited  partnerships  that  own  such
properties,  also  as a  result  of the  Consolidation  Transactions.  All  such
properties are collectively  referred to as the  "Properties",  all such limited
partnerships are collectively  referred to as the "Property  Partnerships",  and
all the properties owned by such Property Partnerships are collectively referred
to as the "Partnership  Properties".  The Company provides  property  management
services  to the  Properties  and other  real  property  controlled  by  certain
companies  and  individuals  which are  affiliated  with the Company (the "Grove
Companies")  using the certain acquired assets and liabilities of Grove Property
Services,  L.P. ( "GPS").  National Realty  Services,  L.P., an affiliate of the
Company,  is the  exclusive  provider of real estate  brokerage  services to the
Company.

An exchange offer was made ("the Exchange  Offer") by the Operating  Partnership
for  the  tender  of any or all of the  limited  partnership  interests  of each
Property Partnership (the "Property  Partnership Units") in exchange for limited
partnership  units in the  Operating  Partnership  (the "Common  Units").  These
Common Units are  redeemable  commencing one year after their issuance for cash,
based on the fair  market  value of the  Company's  Common  Shares,  or,  at the
Company's  option,  it  may  exchange  Common  Shares  for  Common  Units  on  a
one-for-one basis, subject to certain antidilution adjustments and exceptions.

The Company  declared a 5% stock  dividend to  shareholders  of record March 10,
1997,  payable  March 28,  1997 and  declared  a 1.125 to 1.0 stock  split  with
respect to all Common Shares outstanding on March 10, 1997,  effective March 14,
1997, (together, the "Stock Split"). As a result of the Stock Split, the Company
issued,  on a pro rata basis,  a total of 95,130 Common Shares to the holders of
the issued and  outstanding  525,000  Common  Shares.  The Company did not issue
fractional  shares in connection  with the Stock Split,  but rather paid cash in
lieu of fractional shares.

A private  placement of equity  securities  (the "New Equity  Investment")  took
place,  pursuant to which the  Company  sold to a group of  investors  (the "New
Equity  Investors") Common Shares totaling,  in the aggregate,  3,333,333 Common
Shares, in exchange for total gross proceeds to the Company of $30.0 million.

The Company contributed to the Operating  Partnership:  (a) the GREAT Properties
and  related  assets in exchange  for a  partnership  interest in the  Operating
Partnership  represented by 620,130 Common Units;  and (b) the gross proceeds of
the New Equity Investment  received by the Company,  in exchange for a number of
Common Units equal to the number of Common  Shares  issued by the Company in the
New Equity Investment.

The Grove  Companies,  pursuant to a contribution  agreement  among the Company,
certain  individuals  including  affiliates  of the  Company  and the  Operating
Company (the "Contribution  Agreement"),  then contributed to the Company and/or
the Operating  Partnership certain assets and liabilities of GPS arising from or
used in connection with property management related services,  and their general
and limited  partnership  interests in each Property  Partnership (or the assets
thereof),  in exchange for an  aggregate  of 904,867  Common Units issued by the
Operating  Partnership  and the  payment of $177,669 by the Company to the Grove
Companies.

In conjunction  with the above  transactions,  the Company and certain  Property
Partnerships have entered into two new credit facilities (together,  the "Credit
Facility")  consisting of (a) a three-year  secured  revolving  acquisition  and
working capital facility of approximately $25.0 million and (b) an approximately
$15.1 million  ten-year term mortgage loan. The Operating  Partnership  used the
net  proceeds  of the New  Equity  Investment  and  borrowings  under the Credit
Facility to refinance the  outstanding  mortgage  indebtedness of certain of the
Property  Partnerships and to acquire certain  minority  interests in certain of
the Property Partnerships.

In  connection  with the  Consolidation  Transactions,  the Company  changed its
distribution  policy.  The Board concluded that enhancement of Shareholder value
could better be achieved  through  growth in the  Company's  asset value,  which
management  believes will be reflected in the market price of the Common Shares,
rather than by maintaining or increasing  the  distribution  yield on the Common
Shares.  Therefore,  the Board has voted to reduce the annual cash distributions
to  Shareholders,  from $.92 per Common Share to $.74 per Common Share ($.63 per
Common Share after giving  effect to the Stock  Split).  The Company  intends to
continue to comply with the REIT requirements under the Internal Revenue Code of
1954 or 1986, as amended,  (the "Code") that 95% of the  Company's  REIT taxable
income be distributed annually,  while retaining for reinvestment in the Company
the maximum amount permitted under the Code.

Persons  receiving  Common  Units  in the  Exchange  Offer  or  pursuant  to the
Contribution  Agreement  (including the Grove  Companies)  are  restricted  from
transferring  such Common Units for a period of one year from the  completion of
the Consolidation  Transactions (March 14, 1997). Each Common Unit is redeemable
following  the  first   anniversary  of  the  completion  of  the  Consolidation
Transactions,  for cash (based on the fair market value of the Common  Shares at
the time of such redemption) or, at the Company's option, it may exchange Common
Shares for Common Units on a one-for-one basis,  subject to certain antidilution
adjustments  and  exceptions.  The  Company  has granted  certain  entities  and
individuals   receiving  Common  Units  in  connection  with  the  Consolidation
Transactions certain registration rights with respect to the Common Shares which
such  holders of Common  Units may receive  upon the  exchange  of their  Common
Units. Pursuant to a registration rights agreement with holders of Common Units,
the  Company  has  agreed to file and  generally  keep  continuously  effective,
beginning one year after the  completion of the  Consolidation  Transactions,  a
registration  statement  covering the issuance of Common Shares upon exchange of
Common Units and the resale of such Common Shares.







Business Objectives and Operating Strategies

The Company's  primary  business  objective is to pursue a growth strategy which
centers on acquisitions and property  redevelopment  in the Northeastern  United
States. This growth strategy, in turn, is intended to increase shareholder value
through  maximizing  investment  returns  with  the  use  of  retained  cash  in
connection  with  acquisitions  to be made by the Company.  Toward this end, the
Company's  distribution policy was changed as described above. The Company plans
to reinvest the retained  balance of its cash flow in its properties,  including
property  redevelopment and additional property  acquisitions,  the reduction of
outstanding  indebtedness and, when  appropriate,  the repurchase of outstanding
Common Shares.  The Company's decision to reduce its quarterly cash distribution
to  Shareholders  is not in response to a reduction in earnings (the Company has
experienced  no such  reduction),  nor is such decision in response to any other
adverse  occurrence  with respect to the business or  operations of the Company.
Rather,  the Company  believes that  focusing its  distribution  and  investment
philosophy on total return to shareholders,  rather than focusing principally on
the  amount  of  periodic  cash  distributions  to  shareholders,  will  enhance
long-term  shareholder value and could reduce the volatility of the market price
of the Common Shares.

Management  intends to implement  its growth  strategy by  acquiring  additional
properties which offer solid and steady growth  opportunities from affiliates of
the Grove Companies or from third party sellers. Management intends to implement
its  growth   strategy  by  acquiring   properties  at  prices  below  estimated
replacement cost which can generate increased cash flow and long-term investment
value from  pre-acquisition  levels through strategic  capital  improvements and
aggressive property management. It will seek to acquire properties that (i) meet
an  identified  market  demand;  (ii) are well located and  under-performing  in
improving rental markets; and (iii) are capable of producing a high component of
current income  through value  added/return  oriented  capital  improvements  to
individual  apartment  units and property  sites,  such as adding new amenities,
including fitness centers and community rooms, upgrading landscaping and signage
and improving the overall curb appeal of the property.

Management  believes  that its  operating  strategy  will  result  in  growth in
Shareholder  value  through:  (i)  maximizing  investment  returns as quickly as
possible; (ii) maximizing investment returns through rigorous on-site management
which implements an individualized  marketing plan for each property  responsive
to the  character of each site,  on both a short and long term basis;  and (iii)
increasing  investment yields by making  return-oriented  capital  improvements,
which  upgrade  individual  apartment  units and  property  sites and,  in turn,
promote stable occupancy rates and justify increased rents.  Management believes
that the use of retained cash in connection with  acquisitions to be made by the
Company will enhance Shareholder value and return on equity.

Acquisition and Development Strategy

Management  believes that the Company,  through its common  management  with the
Grove  Companies,  has available to it an established  network of  relationships
with real estate owners,  developers,  brokers, lenders, and other institutions,
which may provide the Company  with access to  potential  acquisitions  prior to
them being widely marketed.

An acquisition  target should furnish the Company with  significant  opportunity
for increasing  property value through rental increases,  reducing expenses or a
combination of such strategies.  Local  demographics and economics in the target
location  should be stable and strong or showing  continuing  improvement.  When
analyzing acquisition targets, the Company conducts market surveys consisting of
a study of the region,  community  and trading  area. A physical  inspection,  a
review of the  resident  mix,  an  assessment  of the current  vacancies,  and a
complete rental analysis is performed.

Properties  held by affiliates of the Company may satisfy the economic and other
criteria  which  form the  basis for the  Company's  acquisition  strategy.  The
Company  expects  from  time to time  to  seek  to  acquire  one or more of such
properties at such time as it is able to negotiate a fair price.

Redevelopment

The Grove affiliates that previously owned the Original Properties renovated and
upgraded such Properties at the time of the purchase,  and the Company has since
completed additional  renovations.  The exterior of Hamden Center Apartments has
been upgraded, including landscaping,  window shutters and the renovation of the
entrances to all six buildings.  Some building and entrance way roofing was also
replaced at Hamden. At Baron Apartments,  the landscaping at the entrance of the
Property and at the front two buildings  was  upgraded,  and a new rental office
was added.  New energy  efficient  lighting was installed in all common areas of
Baron  Apartments.  At all of the  Properties,  unit  interiors are renovated as
apartments  turn  over,  including  carpet  and  appliance  replacement  and new
lighting  fixtures  as  necessary.  Additionally,  at  some  of the  Partnership
Properties amenities have been added, including fitness centers, community rooms
with large screen televisions and kitchen facilities for entertaining  residents
and guests, and billiard rooms. The Company intends to undertake and/or continue
similar renovations and upgrades in connection with the Partnership Properties.

Future Acquisitions

In the  pursuit  of its  growth  strategy,  the  Company  intends  to  engage in
preliminary  discussions  with  potential  sellers  of  multifamily  properties,
whether affiliates of the Company or third-party sellers.

Management believes that an important strategic target for growth  opportunities
in  the  Company's  primary  market  are  portfolios  of  multi-unit   apartment
communities  owned and  operated by  individuals.  The Company  believes  that a
significant portion of New England's multi-unit housing properties is older, and
that ownership is very  fragmented.  Owners of 75- to 150-unit  complexes in the
Company's market area have advised  management of the Company that they would be
interested  in selling  their  properties,  but they have little or no tax bases
remaining in such properties,  and such owners have concluded that the potential
tax liability  which may be incurred by them upon outright sale is  prohibitive.
By  utilizing  the  Operating  Partnership  structure,  the  Company  can  offer
competitive  purchase  prices to such owners and make  payment of such  purchase
prices in Common Units, thereby deferring all or a portion of an owner's federal
income tax liability.

In the event the Company  desires to purchase a property from an affiliate,  the
Company's investment policies require majority approval of the proposed purchase
by the Trust Managers  independent  of the Company (i.e.,  those who are neither
executive  officers of the Company nor  affiliates of the Grove  Companies,  the
"Independent  Trust  Managers").  The Charter requires a majority of Independent
Trust Managers on the Board at all times.

There can be no assurance that the Company will be able to identify  acquisition
opportunities,  that  definitive  contracts will be entered into with respect to
any prospective  acquisitions,  or that the Company will acquire any property as
to which it enters into a definitive contract.

Cambridge Acquisition

The Company  purchased a ninety-two unit multifamily  apartment complex known as
Cambridge  Estates  Apartments  in  Norwich,  CT on January  12, 1996 from Grove
Cambridge Associates Limited Partnership for $4,250,000.

The  acquisition was financed by a first mortgage of $4,500,000 from a Bank. The
mortgage is secured by a blanket first mortgage lien on the Cambridge  property,
and the Dogwood Hills and Hamden Center  properties.  The  transaction  provided
approximately  $220,000 of cash after the purchase of  Cambridge  and payment of
financing costs of approximately $50,000.

Grove Cambridge Associates Limited Partnership is owned 99% by Grove
Norwich Associates Limited Partnership, and 0.5% each by Grove Investment Group,
Inc. and Springfield Development  Corporation.  Grove Norwich Associates Limited
Partnership is owned 50% by Messrs.  Damon,  Brian and Edmund Navarro and 50% by
individuals who are not affiliates of the Company.  Grove Investment Group, Inc.
is  owned  100%  by  Messrs.  Damon,  Brian  and  Edmund  Navarro.   Springfield
Development  Corporation is owned 100% by individuals  who are not affiliates of
the Company.

Markets

The Company  believes  that the  existing  conditions  in the  Northeast  market
present a substantial  barrier to new  development.  The Northeast is defined to
include the New England and  Mid-Atlantic  states.  The existing  density in the
Northeast marketplace limits the amount of developable land. In addition, zoning
is administered at the local level,  thereby allowing the individual  localities
to impose their own often  restrictive  policies  within the existing zoning and
environmental  laws. The lack of developable  land as well as the current zoning
environment  contribute  to the overall high cost of  construction  of apartment
communities and corresponding low level of multi-family development.

The Company's Properties are located in in-fill locations which have experienced
occupancy  rates  200  basis  points  better  than  the  regional   average  and
approximately  300 basis points  better than the  national  average for 1994 and
1995.  The Company  expects  that the very low vacancy  rate of the  Properties,
combined  with  relatively  low vacancy  rates in its  markets as a whole,  will
enable the  Company to raise rents at the rate of  inflation  or higher over the
next several  years.  The rental  revenues of the Company's  Properties on a pro
forma basis,  increased  3.5% for the twelve  months ended  December 31, 1996 as
compared  with the same period in 1995 and 4.4% for the year ended  December 31,
1995 as compared to the year ended December 31, 1994. The following  table shows
the 1994,  1995 and 1996 vacancy rates of the  Company's  Properties as compared
with the Northeast and the United States.

                                                             VACANCY RATES

                               Company
                              Properties       Northeast *    United States *
1994                             3.8%             7.1%             7.2%
1995                             3.6%             6.9%             7.5%
1996                             3.0%             7.1%             7.7%

                   * Source: Hanley-Wood, U.S. Housing Markets

The Company  believes that  occupancy  levels at its  Properties  are increasing
principally  because  few new  apartment  communities  are  being  built  in its
markets.  For the year  ended  December  31,  1995,  the  occupancy  rate of the
Properties  was  96.4%,  and the  rate  increased  to 97.0%  for the year  ended
December 31, 1996. The Company believes that the lack of new multi-unit  housing
properties,  the low  ratio of  rental  costs  relative  to income in two of its
primary  markets and its high  occupancy  rates should  result in higher  rental
rates and increased  appreciation in the value of the Company's  assets over the
next several years.

Multi-Family

Management  believes that the real estate  capital  shortage  resulting from the
national and regional banking crisis and from residential property over-building
in the 1980's has  severely  limited the supply of new  multi-family  properties
entering the Northeast marketplace since 1991. The Company expects that the high
land costs and high construction costs experienced by many Northeast residential
property  developers and owners will continue to inhibit new construction in the
near term. The Company's  resident  leases are generally for a one-year term, so
that the Company is in a position to  increase  rents  annually if the market is
favorable.

Rental Rates and Occupancy

The average physical occupancy rate of the Company's multi-family Properties for
the twelve months ended December 31, 1996 was 97.0%.  The average monthly rental
rate for the  multi-family  Properties has increased to $.73 per square foot per
month for the twelve months ended  December 31, 1996 from an average of $.72 per
square foot per month for the twelve months ended  December 31, 1995.  The total
commercial  rentable space associated with the Properties is 94,255 square feet.
The average physical  occupancy of the Company's  commercial  Properties for the
twelve  months ended  December  31, 1996 was 98.0%.  The average rent per square
foot per month for the Company's  commercial  Properties  has increased to $0.98
per square foot per month for the twelve months ended  December 31, 1996 from an
average of $0.78 per square foot per month for the twelve months ended  December
31, 1995.

Competition

There are numerous  housing  alternatives  that compete with the  Properties  in
attracting  residents.  The Properties  compete directly with other multi-family
properties and single family homes that are available for rent in the markets in
which the Properties are located. The Properties also compete for residents with
the new and existing home market.  In addition,  the Company competes with other
investors  for  acquisitions  and  redevelopment  projects,  and  some of  these
competitors have greater resources than the Company.

Property Management Services

In connection with the Consolidation Transactions,  the Company has succeeded to
the property  management  activities of GPS, and the Operating  Partnership  has
acquired all of the assets and liabilities of GPS related to property management
activities and the assets utilized to carry them out, constitute the "Management
Division" of the Company. Edmund F. Navarro, Vice President/Property  Management
of the Company,  heads the Company's property management team, and substantially
all of the employees of GPS have become  employees of the Operating  Partnership
in connection with the Consolidation Transactions.

The Management  Division generates all of its fee income from the Properties and
those   properties   owned  by  the  Grove   Companies  but  excluded  from  the
Consolidation Transactions (the "Excluded Properties").  In addition to managing
the  1,752  multi-family  apartment  units  and  the  commercial  space  in  the
Properties, the Management Division manages the Excluded Properties, pursuant to
management  services  contracts  between the Company and the affiliated  limited
partnerships that own the Excluded  Properties.  These properties  include 1,507
apartments in 15 multi-family  residential projects, and 8 properties consisting
of 113,300 square feet of commercial space. The management  services  agreements
provide that the Operating Partnership receives in exchange for its provision of
property  management  services,  with  respect  to  each  Property  or  Excluded
Property,  a fee equal to from 4% to 6% of collected income (excluding  interest
income).  Such management  services  agreements have terms of one year, and will
automatically renew for successive one-year terms if neither party thereto gives
notice of termination within 90 days prior to the end of the then current term.

Management Division Operations

The Management  Division manages properties  utilizing its staff of professional
and support personnel, including certified regional property managers, apartment
managers, apartment maintenance technicians and leasing agents, and the services
of the Accounting Division of the Management Division.  As of December 31, 1996,
the  Management   Division's   property   management   personnel   consisted  of
approximately 170 employees. The depth of the Management Division's organization
is intended to enable it to deliver quality services on an uninterrupted  basis,
thereby promoting resident  satisfaction and improving resident  retention.  The
services of GPS are important to the Company's  implementation  of its objective
to overhaul  management  procedures of prior owners of the  properties  acquired
pursuant to its growth  strategy.  The Management  Division has  developed,  and
continues to improve, on-site management programs, accounting systems, marketing
systems and resident quality control and retention procedures.

The  Management  Division's  property  management  staff  are  employees  of the
Operating  Partnership.  The property management team for each Property includes
on-site management and maintenance  personnel as well as off-site support staff.
Property  management  teams perform  leasing and rent  collection  functions and
coordinate   resident   services.   Substantially   all  personnel  are  trained
extensively and are encouraged, and in certain cases required, to continue their
education through Company-designed in-house courses and participation in outside
seminars.  The focus of the Management  Division's on-site management program is
to provide  prompt,  courteous  and  responsive  service to its  residents.  The
Management  Division  monitors  the  responsiveness  of its  on-site  management
through various  resident  surveys.  Service request  response cards are left in
residents'  apartments after any maintenance is performed,  soliciting  resident
feedback of the service provided.

Accounting Services

The Accounting  Division of the Management Division is managed by Steven Splain,
Controller  of the  Company.  The  accounting  staff  audits and  monitors  each
property's financial records, including monthly income and expense reports, bank
statement reconciliations,  rent rolls and economic occupancy reports and budget
compliance.  Staff members visit each site on a regular basis to conduct on-site
audits and supervise on-site bookkeeping. The information generated during these
visits is used by the Management  Division's  on-site  management  staff at each
site to set personal  and team goals which relate to budget and fiscal  matters,
on a weekly and monthly  basis,  subject to the  supervision  of the  Management
Division.

Property Marketing

The rental marketing  personnel of the Management Division are trained to assure
that  each   property  is   marketable,   priced   realistically   and  promoted
aggressively.  The Management Division uses a full range of promotional tools in
its marketing programs:  point-of-purchase  materials, high quality curb appeal,
targeted advertising and resident referrals.  Instead of waiting until vacancies
occur,  the  Management  Division  markets  the  properties  in  its  management
portfolio on a continuous  basis. It takes steps necessary to avoid move-outs by
quality  residents,  which include quality customer service throughout the lease
term and renewal incentives.

The Management  Division has established  specific  reporting  requirements  and
management guidelines to be applied at each of the Properties. Marketing reports
are  prepared  by on-site  property  management  staff to track each  Property's
occupancy,  lease expiration,  prospective resident traffic,  unit availability,
renewal  and rental  rates and  resident  profile  information.  The  Management
Division's on-site staff,  which consists of property managers,  leasing agents,
service  technicians,  porters  and  landscapers,  participates  in weekly  goal
setting sessions to evaluate these marketing reports and examine issues relating
to resident underwriting, to evaluate progress, to set the next week's goals and
to review  financial  results.  These  sessions are supervised by the Management
Division's marketing director and regional managers. In this way, the Management
Division encourages customer service and team empowerment.

Marketing and leasing  procedures  established  by the  Management  Division are
designed  to ensure  compliance  with all  federal,  state  and  local  laws and
regulations.  Individual  property  marketing  plans have been structured by the
Management Division to respond to local market conditions. Resident underwriting
guidelines for prospective residents comply with the FHA and ADA regulations and
are designed to stabilize  service  levels and cash flow through lower  resident
turnover.  None of the Properties are currently  subject to rent control or rent
stabilization  regulation or deed restrictions.  The Company's standard 12-month
lease  contracts  facilitate  uniform  lease  administration  relating  to  rent
collections, security deposit dispositions, evictions, repairs and renewals.

Construction Services

An employee of the  Operating  Partnership  functions  as a general  contractor,
supervising the various  sub-contractors  who perform  construction  and related
services in connection with the redevelopment of the Properties and the Excluded
Properties.

Credit Facilities

Initial Credit Facility

The Company  entered in June 1994 into a secured an initial credit facility with
the Rhode Island  Hospital Trust National Bank,  which provided the Company with
up to $3,000,000 of available  credit.  The credit  facility was not drawn upon,
and was  terminated in January,  1996  concurrent  with the  acquisition  of the
Cambridge Property.

Credit Facility

As  part  of  the   Consolidation   Transactions,   $39.3  million  of  mortgage
indebtedness of 17 of the Properties was refinanced with the Credit Facility. On
a pro  forma  basis  as of  December  31,  1996,  after  giving  effect  to  the
Consolidation  Transactions,  including the application of the proceeds from the
New Equity  Investment and borrowings under the Credit  Facility,  the aggregate
indebtedness of the Properties was approximately $29.3 million, bearing interest
at a fixed rate or an effective  fixed rate after giving effect to the "Interest
Swaps" (as defined below).

The Credit Facility consists of two separate loans: (i) a revolving, acquisition
mortgage loan facility of up to $25.0 million (the "Revolving  Credit Facility")
and (ii) a ten-year  term  mortgage  loan of  approximately  $15.1  million (the
"Long-Term  Facility"),  each  of  which  is more  fully  described  below.  The
Revolving Credit Facility is recourse to the Operating Partnership,  the Company
and the Property Partnerships.







Revolving Credit Facility

On March 26, 1997 a three-year term, Revolving Credit Facility for $25.0 million
was  entered  (subject  to a  maximum  of  60%  of the  appraised  value  of the
collateral,  to be  determined  from time to time  during the term),  secured by
cross-defaulted  first  mortgages  on  nine  of  the  Properties,  a  collateral
assignment  of the leases and rents  associated  with such  Properties,  a first
priority  security  interest in all personal property located at such properties
related to the  operation  of the real  property,  and a full  guarantee  of the
Company.  Borrowings under the Revolving Credit Facility will bear interest at a
floating  rate equal to 1.20% per annum above the 30-, 60- or 90-day LIBOR rate.
Interest under the Revolving Credit Facility is payable  monthly.  The Operating
Partnership  is required to maintain  Debt  Service  Coverage (as defined in the
Revolving  Credit  Facility)  of at  least  1.60 to 1.0 on the  properties  that
constitute  the  collateral  for the Revolving  Credit  Facility and to maintain
aggregate  minimum  occupancy for the collateral pool of 90%, with not less than
80% occupancy for any single property. All of the Revolving Credit Facility will
be  available  to  supplement  net cash  generated  from the  operations  of the
Operating  Partnership  to fund  future  property  acquisitions,  and up to $4.0
million is expected to be available to fund working  capital  requirements.  The
Revolving Credit Facility was not drawn upon at the closing of the Consolidation
Transactions.  During the term of the Revolving Credit Facility, the Company (as
a guarantor  thereunder)  will be  required  to maintain a Debt to Tangible  Net
Worth Coverage (as defined in the Revolving  Credit  Facility) of less than 1.25
to 1.0 and to  distribute  to  Shareholders  not more  than  95% of  Funds  From
Operations  ("FFO").  Amounts  outstanding from time to time under the Revolving
Credit Facility may be prepaid  without  penalty or premium.  The loan documents
entered into in connection with the Revolving Credit Facility contain such other
representations  and  warranties,  conditions  and covenants as are  customarily
found in similar financing documents.

Long-Term Facility

On March 14, 1997, a ten-year term mortgage  loan in the  approximate  amount of
$15.1 million, secured by first mortgages on eight of the Properties, collateral
assignments  of the  leases  and rents  associated  with such  Properties  and a
security interest in all personal property and improvements associated with such
Properties,  was obtained.  The Long-Term Facility is  cross-collateralized  and
cross-defaulted,   but  is   non-recourse  to  the  Company  and  the  Operating
Partnership except for recourse with respect to waste,  misapplication of rents,
insurance  proceeds and/or  condemnation  proceeds,  environmental  problems and
liabilities,  failure to use property income to pay property expenses and fraud.
Under the terms of the Long-Term Facility, neither the borrowers nor any general
or limited  partners of the  borrowers  will be  permitted  to obtain  secondary
financing or pledge their equity  interests in the Properties  constituting  the
collateral  toward any other debt.  The Long-Term  Facility  bears interest at a
rate equal to the one-month LIBOR rate plus 114 basis points,  and interest only
is payable  monthly  throughout the term. The borrowers will not be permitted to
prepay amounts  outstanding under the Long-Term  Facility during the first three
years of the term;  thereafter,  prepayment  is  permitted  without  penalty  or
premium.  The Long-Term  Facility  provides that each Property which constitutes
collateral  thereunder  must be managed by the Company or an  affiliate,  except
that the lender may compel the Company to engage a new manager for any  Property
if such  Property  fails to maintain a certain  minimum  debt  service  coverage
ratio. The loan documents entered into in connection with the Long-Term Facility
contain such other  representations and warranties,  conditions and covenants as
are customarily found in similar financing documents.

Interest Rate Protection

In connection  with the Long-Term  Facility  which bears  interest at a variable
rate,  the  Operating  Partnership  entered  into two  interest  rate swaps (the
"Interest  Swaps") with a third-party  lender for a "notional"  principal amount
equal, in the aggregate,  to $15.2 million,  to hedge the risk of an increase in
interest rates to a variable rate index  (one-month  LIBOR).  The Interest Swaps
are  separate,  stand alone  agreements  pursuant to which the borrowers and the
third party  lender have  exchanged  net future  interest  payments so that,  in
effect,  the  borrowers  have fixed their  interest  rate at a fixed  rate.  The
Interest Swaps, in effect, (i) have fixed $7.6 million of the post-Consolidation
Transactions  indebtedness of the borrowers at an interest rate of 7.67% for the
period  from  October 1, 1997  through  October 1, 2007,  and (ii) have fixed an
additional $7.6 million of the post-Consolidation  Transactions  indebtedness of
the borrowers at an interest rate of 7.68% from October 1, 1997 through  January
4, 2005.





Employees

The  Company  employs  approximately  120  persons,  92 of  whom  are  "on-site"
employees.  The remaining employees are located at the Company's headquarters in
Hartford, Connecticut.

Policies with Respect to Certain Activities

The  Company's  policies  with  respect to the  following  activities  have been
determined  by the Board of Trust  Managers  and may be amended or revised  from
time to time at the discretion of the Board of Trust Managers  without a vote of
the  shareholders  of the Company.  No assurance can be given that the Company's
investment objectives will be attained or that the value of the Company will not
decrease.

Investment Objectives and Policies

The Company's  investment  objective is to provide  quarterly  distribution of a
portion  of cash  available  for  distribution  and  achieve  long-term  capital
appreciation  through  increases in cash flow from  operations,  reinvestment of
retained cash and growth of the Company's  portfolio  through  acquisitions  and
redevelopment.  For a discussion  of the Company's  growth  strategy of property
acquisition and  redevelopment  and related business  strategies,  see "Business
Objectives and Operating  Strategies" under this Item 1. The Company's policy is
to acquire assets primarily for generation of current income and appreciation in
long-term value.

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 of the Properties,  or any
properties  to be acquired  by the  Company in the  future,  may be secured by a
first mortgage. Any such financing or indebtedness 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.

While the  Company  emphasizes  equity real estate  investments  in  multifamily
properties,  it may, at the discretion of the Board of Trust Managers, invest in
shoreline or coastal  mixed use  buildings,  equity real estate  investments  in
other type of  properties,  mortgages  (including  participating  or convertible
mortgages),  stock of other REIT's and other real estate interests.  The Company
does not presently  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  issuers is subject to the  percentage  of
ownership limitations and gross income tests necessary for REIT qualification.

Dispositions

Management  periodically will review the assets in the Company's portfolio.  The
Company has no current  intention  to dispose of any  Property,  or any property
that may be acquired in the future, unless the Board of Trust Managers, based in
part upon management's periodic reviews, determines that the disposition of such
property is in the best interests of the Company.

Financing Policies

The  Company  intends to  maintain a  conservative  debt-to-total-capitalization
ratio of 60% or  less.  Such  ratio  presents  total  debt of the  Company  as a
percentage of the market value of the Common Shares plus  consolidated  debt. At
March 14, 1997, the Company had a debt-to-total  market-capitalization  ratio of
approximately  32% (based on the closing  price per Common Share on the American
Stock  Exchange on such date of $10.05  ($11.875  prior to giving  effect to the
Stock  Split)).  The  debt-to-total-capitalization  ratio  will  fluctuate  with
changes in price of the Common  Shares (and the  issuance of  additional  Common
Shares,  or  other  forms  of  capital,  if  any).  The  Company  believes  that
debt-to-total-capitalization   ratio  provides  an  appropriate   indication  of
leverage for a company whose assets are  primarily  operating  real estate.  The
Company's  Declaration of Trust 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  policy in light of  current  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  fair  market  prices  of the  Common  Shares,  growth  and
acquisition  opportunities  and other  factors.  Accordingly,  the  Company  may
increase or decrease  its  debt-to-total-capitalization  ratio beyond the limits
described above.

In the event that the Board of Trust  Managers  determines  to raise  additional
equity  capital,   the  Board  has  the  authority,   without  approval  of  the
Shareholders,  to issue  additional  Common  Shares or  Preferred  Shares in any
manner  (and on such  terms and for such  consideration)  it deems  appropriate,
including exchange for property.

Indebtedness  incurred  by the  Company  may be in the form of bank  borrowings,
purchase money obligations to the sellers of properties, such as the Southington
Note,   publicly  or  privately   placed  debt  instruments  or  financing  from
institutional  investors  or other  lenders,  any of which  indebtedness  may be
unsecured or may be secured by mortgages or other interest in the property owned
by the Company.  The recourse of the holders of such  indebtedness may be to all
or any part of the  property of the Company or may be limited to the  particular
property to which the indebtedness  relates. The proceeds from any borrowings by
the Company must be loaned, on the same terms, to the Operating Partnership

Other Policies

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
to (i) invest in the  securities  of other issuers for the purpose of exercising
control over such issuer,  (ii) underwrite  securities of other issuers or (iii)
actively trade in loans or other investments.

The Company may make investments other than as previously described, although it
does not  currently  intend to do so. The Company has  authority  to purchase or
otherwise  acquire  Common  Shares  or any of its other  securities  in the open
market or  otherwise  may engage in such  activities  in the  future.  Except in
connection  with the  Consolidation  Transactions,  the  Company  has not issued
Common  Shares or any other  securities  in exchange  for  property or any other
purpose.  The Board of Trust  Managers has  authorized the repurchase of 100,000
Common  Shares;  any such  repurchase  would be taken  only in  conformity  with
applicable  Federal and state laws and the requirements for qualifying as a REIT
under the Code.

The  Company  has not made any loans to third  parties,  although  it may in the
future  make  loans to third  parties,  including,  without  limitation,  to the
Property  Partnerships  or other joint  ventures in which it  participates.  The
Company has not engaged in trading,  underwriting or agency distribution or sale
of securities of other issuers,  and the Company does not intend to do so in the
future.  The Company's  policies with respect to such activities may be reviewed
and modified from time to time by the Board of Trust Manages without the vote of
the Shareholders.

At all times,  the Company intends to make investments in such a manner as to be
consistent  with the  requirements  of the  Code to  qualify  as a REIT  unless,
because of  circumstances  or changes in the Code, the Board of Trust  Managers,
determines to revoke the Company's REIT election.

Regulation

General

Apartment community properties are subject to various law, including regulations
relating to recreational facilities such as swimming pools, activity centers and
other common areas. The Company believes that under present laws, ordinances and
regulations,  it  has  the  necessary  permits  and  approvals  to  operate  the
Properties.

Americans with Disabilities Act

The Properties and any newly acquired  properties  must comply with Title III of
the ADA to the extent that such  properties are "public  accommodations"  and/or
"commercial  facilities"  as  defined  by  the  ADA.  Compliance  with  the  ADA
requirements could require removal of structural  barriers to handicapped access
in  certain  public  areas of the  Properties  where  such  removal  is  readily
achievable. The ADA does not, however, consider residential properties,  such as
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.   Although  the  Company  believes  that  the  Properties
substantially  comply with all present requirements under the ADA and applicable
state  laws,  final  regulations  under  the ADA have not yet been  promulgated.
Noncompliance  could  result in  imposition  of fines or an award of  damages to
private  litigants.  If required changes involve greater  expenditures  than the
Company  currently  anticipates,  or if  the  changes  must  be  made  on a more
accelerated  basis than it anticipates,  the Company's  ability to make expected
distributions  could  be  adversely  affected.  The  Company  believes  that its
competitors face similar costs to comply with requirements of the ADA.

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. The Company
believes that the Properties that are subject to the FHAA are in compliance with
such law.

Rent Control Legislation

State and local  rent  control  laws in certain  jurisdictions  limit a property
owners'  ability to increase  rents and to recover from  residents  increases in
operating expenses and costs of capital improvements. Enactment of such laws has
been  considered  from time to time in other  jurisdictions,  although such laws
have not been  adopted  in  jurisdictions  where the  Company's  Properties  are
located. The Company does not presently intend to acquire multifamily properties
in markets that are either  subject to rental  control or in which rent limiting
legislation exists.

Environmental Matters

Under various Federal,  State and local  environmental  laws,  regulations,  and
ordinances,  a current  or  previous  owner of real  estate may be  required  to
investigate  and clean up hazardous  or toxic  substances  or petroleum  product
releases at such property, and may be held liable to a governmental entity or to
third  parties for  property  damage and for  investigation  and  cleanup  costs
incurred by such parties in connection with the contamination.  Certain federal,
state  and  local  laws,   regulations   and  ordinances   govern  the  removal,
encapsulation or disturbance of asbestos-containing  material ("ACMs") when such
material  are  in  poor  condition  or in  the  event  of  building  remodeling,
renovation or demolition.  In connection with its ownership and operation of the
Properties,  the Company may be potentially  liable for costs in connection with
the matters discussed above.

All of the Properties were subject to Phase I  environmental  assessments at the
time of their  acquisition  by the  respective  Grove  Companies,  which Phase I
assessments were intended to discover information regarding, and to evaluate the
environmental  condition of, the surveyed Properties and surrounding properties.
A Phase II Limited  Subsurface  Investigation was performed at Southington.  The
Phase I assessments  and the Limited Phase II assessment  generally  included an
historical  review, a public record review,  a preliminary  investigation of the
site and  surrounding  properties,  screening for presence of ACMs and equipment
containing  polychlorinated  biphenyl's , and underground  storage tanks and the
preparation and issuance of a written report,  but did not include soil sampling
or subsurface investigations. In all cases where Phase I assessments resulted in
specific recommendation for remedial actions, or maintenance recommendation, the
recommended  action, or action preferable to the recommended  action in the case
of  Southington,  was promptly taken or will be taken.  Specifically,  and as an
example,  although the Phase I assessment at Southington  recommended  that only
fittings on two  underground  fuel oil storage  tanks be replaced  and  removed,
Management  determined that it is  cost-efficient on a long term basis to remove
and replace  both tanks.  The removal of the tanks in was  completed in December
1995.

Although the Company is not aware of any environmental liability revealed by the
assessments,   it  is  possible  that  these   assessments  do  not  reveal  all
environmental  liabilities or that there are material environmental  liabilities
that the Company is unaware of.  Moreover,  no assurances  can be given that (i)
future laws,  ordinances or regulations  will not require or impose any material
expenditures or liabilities in connection with environmental conditions by or on
the Company or its Properties,  (ii) the current  condition of properties in the
vicinity of the Properties  (such as the presence of underground  storage tanks)
or actions  (or  inaction)  by third  parties  unrelated  to the Company did not
create  environmental  problems of which the  Company is not aware.  The Phase I
site assessments for the Original  Properties  indicated that certain amounts of
friable  (easily  crumbled  or reduced to powder)  ACMs were  present at Dogwood
Hills,  although  none were present at Hamden  Center or  Southington.  The site
assessment  for Dogwood Hills  indicated  that the ACMs were in such  conditions
that it did not mandate removal or  installation  of an operational  maintenance
program unless  renovations  were to be undertaken that would disturb such ACMs.
The Company has no plans to renovate the interiors of Dogwood Hills which relate
to such ACMs,  except for painting,  which Management  believes will improve the
encapsulation recommended by the Phase I assessment.

The Company  believes  that the  Properties  are in  compliance  in all material
respects  with all Federal,  state and local laws,  ordinances  and  regulations
regarding  hazardous  or toxic  substances,  petroleum  products  and lead paint
levels. The Company has not been notified by any governmental authority,  and is
not otherwise aware, of any material noncompliance,  liability or claim relating
to hazardous or toxic  substances or petroleum  products in connections with any
of the Properties.

Insurance

The Company carries comprehensive  liability,  fire, extended coverage insurance
with respect to all of the Properties, with policy specifications, insured limit
and deductibles customarily carried for similar properties.  There are, however,
certain types of losses that are not generally  insured  because they are either
uninsurable or not economically insurable. Should an uninsured loss or a loss in
excess of insured limits occur,  the Company could lose its capital  invested in
the affected  property,  as well as the  anticipated  future  revenues from such
property and would  continue to be obligated  on any  mortgage  indebtedness  or
other obligations related to the property.  Any such loss would adversely affect
the Company.  Management  believes that the Properties are adequately insured in
accordance with industry standards.

Item 2.  Properties

The  Company's  executive  offices are located at 598 Asylum  Avenue,  Hartford,
Connecticut.

The GREAT Properties

The GREAT Properties consist of four multifamily  apartment complexes located in
Hamden,  Norwich and Southington,  Connecticut,  with a total of 257 residential
apartments.  Tenant  leases  are  generally  for one year or less,  and  require
security deposits. The GREAT Properties averaged a 97.6% occupancy rate in 1996.
No single  tenant  accounts  for more than 10% of the  GREAT  Properties'  total
revenues.

In  connection  with the  purchase of the  Southington  Apartments,  the Company
assumed a mortgage  note which is secured  by the  Southington  Apartments.  The
acquisition  of the Cambridge  property was financed by a first  mortgage from a
Bank  which  is  secured  by a  blanket  first  mortgage  lien on the  Cambridge
property, the Dogwood Hills and Hamden Center properties.

                                           Weighted       Occup-
                               Approx.      Average  1996  ancy  Rental  Rental
                     Number    Rental        Unit    Avg.   at   Rates   Rates
Location and            of      Area  Year   Size   Occup-  Feb. Per     Per Sq.
                                              ( Sq   ancy   28,  Unit     Ft.
Property Name         Units  (Sq.Ft.) Built     Ft.) (%)   (%)  1997($)   ($)
-------------         -----  --------------     --------   ---  -------   ---

Norwich, CT
 Cambridge Estates
  Apts ................  92    78,684  1977   855    98.3  100.0  682.27   0.80
Hamden, CT
 Dogwood Hills ........  46    35,512  1978   772    98.2   97.8  724.16   0.94
Apartments
 Hamden Center ........  65    49,140  1968   756    96.7   93.9  639.23   0.85
Apartments
Southington, CT
Baron Apartments ......  54    48,600  1970   900    96.8   98.2  686.25   0.76
---------------------------   ------- -----  ----  ----   ----   ----   ----
Total/Weighted Average  165   211,936         825    97.6   97.8  680.22   0.83
                        ===   =======         ===    ====   ====  ======   ====







The following is a summary by apartment type for each of the GREAT Properties:

                                1 Bedroom         2 Bedroom          Total
                                ---------         ---------          -----
Cambridge Estates Apartments        42                 50               92
Dogwood Hills Apartments            23                 23               46
Hamden Center Apartments            31                 34               65
Baron Apartments                    16                 38               54
                                    --                 --               --
           Total                   112                145              257
                                   ===                ===              ===

New Acquisitions

The  Consolidation  Transactions  resulted in the  consolidation of the holdings
and/or control by the Company of 19 multi-family  residential properties and one
neighborhood shopping center, and certain assets and liabilities of GPS.

The  following  table  sets  forth  certain  information  with  respect  to  the
Partnership  Properties  acquired,  controlled,  directly or indirectly,  by the
Company  and  the  Operating  Partnership,  as a  result  of  the  Consolidation
Transactions:

                                                 No. of Apartments
                                                and/or Commercial   Occupancy at
Name of Property              Location             Square Footage  December 31,
                                                                         1996
----------------              --------             --------------      -------

Avonplace Condominiums        Avon, CT                     145          95.8%
Burgundy Studios Apartments   Middletown, CT               102          99.0%
Arbor Commons                 Ellington, CT      28/4,016 sq. ft.      100.0%
Fox Hill Apartments           Enfield, CT                  168          95.2%
The Longmeadow Shops          Longmeadow, MA       79,012 sq. ft.      100.0%
208-210 Main Street           Manchester, CT     28/9,597 sq. ft.       96.4%
Loomis Manor                  West Hartford, CT             43         100.0%
Dean Estates II Apartments    Cranston, RI                  48          95.8%
Woodbridge Apartments         Newington, CT                 73          97.3%
Royale Apartments             Cranston, RI                  76          94.7%
Colonial Village Apartments   Plainville, CT               104          98.1%
Bradford Commons              Newington, CT                 64          92.2%
Dean Estates Apartments       Taunton, MA                   58          96.6%
Fox Hill Commons              Vernon, CT                    74          94.6%
Park Place West               West Hartford, C              63          96.8%
Van Deene Manor               West Springfield, MA 109/1,630 sq. ft.   100.0%
Security Manor                Westfield, MA                 63         100.0%
Westwynd Apartments           West Hartford, CT             46          97.8%
Ocean Reef Apartments         New London, CT               163          93.9%
Sandalwood Apartments         New London, CT                39          89.7%
                                                     ================

     Total                                            1,752/113,320 sq.ft.
                                                      ===============

Item 3.  Legal Proceedings

Neither the Company nor the  Properties  are  presently  subject to any material
litigation nor, to the Company's  knowledge,  is material litigation  threatened
against the Company or the Properties,  other than routine litigation arising in
the ordinary course of business and which is expected to be covered by liability
insurance.

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

No matter was submitted  during the fourth quarter of the fiscal year covered by
this Report to a vote of security  holders,  through the solicitation of proxies
or otherwise.








PART II

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

Market Information

The Common Shares have traded on the American Stock Exchange  ("AMEX") under the
symbol "GRE" since June 23, 1994.  The Common Shares are also  registered on the
Boston Stock  Exchange.  On February 10,  1997,  the Company  declared the Stock
Split. See Item 1, Consolidation Transactions.  Amounts indicated below have not
been restated to reflect these changes in capital structure. The following table
sets forth for the periods indicated the high and low sale prices as reported on
the AMEX and the  dividends  declared by the  Company per Common  Share for each
such period:


1995 Quarter Ending
                                                                 Dividend per
                                         High          Low       Common Share
March 31, 1995                          $8.875        $7.75        $0.2225
June 30, 1995                           $8.750        $8.50        $0.2275
September 30, 1995                      $8.375        $8.00        $0.2275
December 31, 1995                       $8.875        $7.25        $0.2275

1996 Quarter Ending
                                                                 Dividend per
                                         High          Low       Common Share
March 31, 1996                          $10.125      $8.375        $0.2275
June 30, 1996                           $10.000      $9.000        $0.2300
September 30, 1996                      $9.500       $8.875        $0.2300
December 31, 1996                       $9.625       $8.250        $0.2300

Dividends

During 1996, the Company declared  dividends  totaling $0.9175 per Common Share,
or  approximately  76.1% of its funds from operations  during the year. For 1995
the  Company   declared   dividends   totaling  $0.9050  per  Common  Share,  or
approximately 80.6% 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.  See  "Business
Objectives  and Operating  Strategies" in Item 1 of this report for a discussion
of the Board's recent change in the Company's distribution policy.

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  $0.0233 (or 2.5%) of the $0.9175 of  dividends  declared for 1996
represented a return of capital. Approximately $0.1519 (or 16.8%) of the $0.9050
of dividends declared for 1995 represented a return of capital.

On  February  10,  1997,  the  Company  declared  the Stock  Split.  See Item 1,
Consolidation  Transactions.  Per  share  amounts  stated  above  have  not been
restated to reflect these changes in capital structure.

See  Item 1,  Consolidation  Transactions,  for a  discussion  of the  Company's
current distribution policy.







Holders

The approximate  number of holders of record of the Company's  Common Shares was
39 on December 31, 1996. The Company's transfer agent estimates that the Company
has 400 beneficial owners of the Common Shares.

Item 6.  Management's Discussion and Analysis or Plan of Operation

Overview

The following discussion should be read in conjunction with all of the financial
statements and notes thereto included elsewhere herein.

On February 10,  1997,  the Company  declared the Stock Split.  Number of shares
outstanding,  Net income  per Common  Share,  Funds from  operations  per Common
Share,  and Cash available for  distribution per Common Share have been restated
to reflect the Stock Split. Dividends per Common Share have not been restated as
it reflects the Company's historical payout rate.

Selected Financial Data

The  following  table sets forth  financial  data for the  Company for the years
ended  December 31, 1996 and 1995 on an historical  basis.  The  following  data
should be read in  conjunction  with all of the financial  statements  and notes
thereto included elsewhere in this Report.  The historical  operating results of
the Company may not be indicative of future operating results of the Company.

Please see table set forth on next page.







                                                            1996           1995
                                                            ----           ----
OPERATING DATA
Revenues:
   Rental income                                      $  2,046,390     1,287,013
   Other income                                             35,849        29,902
                                                   --------------- -------------
      Total revenues                                     2,082,239     1,316,915
                                                   --------------- -------------
Expenses:
   Property operating and maintenance                      655,821       406,227
   Related party management fees                           108,731        66,781
   General and administrative                               66,798        56,363
   Real estate taxes                                       208,302       147,770
   Interest expense                                        394,657        85,103
   Depreciation and amortization                           386,641       216,413
                                                   --------------- -------------
      Total expenses                                     1,820,950       978,657
                                                   =============== =============
Net income                                            $    261,289       338,258
                                                  =============== =============

Net income per Common Share (after Stock Split)            $  0.42          0.55
Dividends per Common Share (prior to Stock Split)             0.92          0.91

Number of shares outstanding (after Stock Split)           620,130       620,130

PROPERTY DATA
Number of properties (at end of period)                          4             3
Number of units (at end of period)                             257           165

OTHER DATA (after Stock Split)
Funds from operations ("FFO")                             $633,031       551,987
FFO per share                                                 1.02           .89
Cash available for distribution ("CAD")                    557,031       526,398
CAD per share                                                  .90           .85

BALANCE SHEET DATA
Real estate assets                                  $    9,798,136     5,392,699
Accumulated depreciation                               (1,049,815)     (694,215)
Total assets                                             9,520,610     5,241,173
Total debt                                               6,038,109     1,538,273
Shareholders' equity                                     3,482,501     3,702,900

Industry  analysts  generally  consider FFO to be an appropriate  measure of the
performance  of an equity  REIT.  FFO is  defined  as net  income  (computed  in
accordance with generally accepted accounting  principals),  excluding gains (or
losses) from debt  restructuring  and sales of property,  plus  depreciation and
amortization  and other  non-cash  items.  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
indicator of the Company's  operating  performance  or as an alternative to cash
flow as a measure of liquidity.

CAD is defined as FFO (as defined above) plus depreciation on personal property,
less mortgage principal payments and recurring capital  improvements.  Recurring
capital  improvements  include,  but are not  limited  to,  carpet and  flooring
replacement,   appliance  replacements,  and  electrical  and  plumbing  fixture
replacement.  CAD 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. CAD should not be considered as
an  alternative  to  net  income  as an  indicator  of the  Company's  operating
performance or as an alternative to cash flow as a measure of liquidity.







Results of Operations

Results of  operations  for the Company for the year ended  December  31,  1996,
compared to the year ended December 31, 1995.

Rental and other income increased $765,324 from $1,316,915 to $2,082,239 for the
years ended December 31, 1995 and 1996, respectively.  Approximately $733,000 of
such  increase was due to the  operations  of  Cambridge,  and the  remainder is
attributable to the Original Properties.  The Original Properties  experienced a
small decrease in occupancy offset by increases in rental rates,  which resulted
in increased  revenues.  The weighted average rental rates increased to $678 for
the year ended December 31, 1996 from $660 for the year ended December 31, 1995.
Physical occupancy decreased to an aggregate weighted average occupancy of 97.6%
for the year ended December 31, 1996 from an aggregate weighted average of 97.8%
for the year ended  December 31, 1995.  Physical  occupancy at December 31, 1996
was 98.2%.

Property  operations and maintenance  expenses  increased $249,594 from $406,227
for the year ended December 31, 1995 to $655,821 for the year ended December 31,
1996.  Approximately  $233,000  of the  increase  is due  to the  operations  of
Cambridge.  Additionally,  the Original  Properties  experienced  an increase in
operating and maintenance expenses due primarily to the harsh winter experienced
in the New England area in 1996 compared to the more mild winter  experienced in
1995.

General and  administrative  expenses  increased $10,435 from $56,363 to $66,798
for the years ended December 31, 1995 and 1996,  respectively.  The increase was
primarily due to additional expenses related to the acquisition of Cambridge and
increased overhead expenses.

Real estate  taxes  increased  $60,532  from  $147,770 to $208,302 for the years
ended December 31, 1995 and 1996,  respectively.  Related party  management fees
increased $41,950 from $66,781 to $108,731 for the years ended December 31, 1995
and 1996, respectively. These increases were due primarily to the acquisition of
Cambridge.

Interest expense increased $309,554 from $85,103 to $394,657 for the years ended
December 31, 1995 and 1996, respectively. This increase is due to the $4,500,000
mortgage note payable used to finance the acquisition of Cambridge. Depreciation
and amortization increased $170,228, primarily as a result of the acquisition of
Cambridge.

The  Company's  net income  decreased  $76,969 from $338,258 to $261,289 for the
years ended December 31, 1995 and 1996,  respectively.  Approximately $54,000 of
the  decrease  was due to a loss  experienced  by  Cambridge,  primarily  due to
depreciation  and  amortization  associated with Cambridge.  The decrease in net
income  for the  Original  Properties  of  approximately  $23,000  was due to an
increase in property operating and maintenance expenses as discussed above.

Liquidity and Capital Resources

Cash  and cash  equivalents  totaled  $381,340  as of  December  31,  1996.  The
Company's  long-term  debt-to-market  capitalization  on  December  31, 1996 was
approximately  55%  based on total  market  capitalization  of  $10,918,578  and
long-term debt of $5,668,578.

Cash  provided by  operating  activities  increased  $133,375  from  $585,144 to
$718,519 for the years ended December 31, 1995 and 1996, respectively, primarily
due to the  increase in  depreciation  and  amortization  of  $170,228  upon the
acquisition of Cambridge and from the operations of Cambridge.

Cash used in investing  activities  increased  $203,425 from $99,002 to $302,427
for the years ended December 31, 1995 and 1996,  respectively,  due primarily to
the costs associated with the Consolidation Transactions of $174,079.

Net cash  used in  financing  activities  decreased  $99,952  from  $518,429  to
$418,477  for the years  ended  December  31,  1995 and 1996,  respectively.  On
January 12, 1996 Cambridge was purchased from Grove Cambridge Associates Limited
Partnership  for  $4,250,000.  The  acquisition  was  100%  financed  by a first
mortgage of $4,500,000  from a bank. The  transaction  provided the Company with
approximately  $220,000 of cash after the purchase of  Cambridge  and payment of
financing and other  closing costs of $50,000.  This increase in cash was offset
by repayments of the associated  mortgage payable of $58,961 and the increase in
payments to affiliates of $55,409.

On December  16, 1996 the  Company  declared a dividend of $0.23 per share.  The
dividend was paid on January 15, 1997 to  Shareholders of record on December 24,
1996. On September 13, 1996, the Company declared a dividend of $0.23 per share,
payable on October 17, 1996 to  Shareholders of record on September 25, 1996. On
May 17,  1996,  the Company  declared a dividend of $0.23 per share,  payable on
July 17, 1996 to  Shareholders of record on June 26, 1996. On March 21, 1996 the
Company  declared a dividend of $0.2275  per share  payable of April 16, 1996 to
Shareholders of record on March 26, 1996.  Dividends declared during the year of
$0.9175 per Common  Share  resulted in a 76.1%  payout of FFO for the year ended
December 31, 1996.

The Company intends to meet its short term liquidity  requirements  through cash
flow provided by operations.  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 expects to finance acquisitions using the Revolving Credit Facility.
Additionally,  the  Company  may also use other  sources  of  capital to finance
additional acquisitions including, but not limited to, the selling of additional
equity  interest in the  Company,  non-distributed  Funds From  Operations,  the
issuance of debt  securities,  and exchanging  Common Shares or Common Units for
properties  or  interest  in  properties.  See Item 1,  Credit  Facility,  for a
discussion of the new financing related to the Consolidation Transactions.

Funds from Operations

Industry analysts generally  consider FFO an appropriate  measure of performance
of an equity REIT.  FFO is defined as net income  (computed in  accordance  with
generally accepted accounting  principles) excluding gains (or losses) from debt
restructuring  and sales of properties,  plus  depreciation and amortization and
other non-cash items.  The Company  believes that in order to facilitate a clear
understanding  of its operating  results,  FFO should be examined in conjunction
with net income as presented in the audited financial statements and information
included  elsewhere in this Report.  FFO do 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.

FFO  increased  $81,044  from  $551,987 in 1995 to  $633,031 in 1996.  Dividends
declared for the year ended December 31, 1996 were $481,688, representing 76.09%
of funds from  operations.  Dividends  declared for the year ended  December 31,
1995 were $475,125, representing 87.5% of funds from operations. The increase in
FFO is primarily due to the operations of Cambridge.

Cash Available for Distribution

CAD is defined as FFO (as defined above) plus depreciation on personal property,
less mortgage  principal payments and recurring capital  improvments.  Recurring
capital  improvements  include,  but are not  limited  to,  carpet and  flooring
replacement,   appliance  replacements,  and  electrical  and  plumbing  fixture
replacement.   The  Company  believes  that  in  order  to  facilitate  a  clear
understanding  of its operating  results,  CAD should be examined in conjunction
with net income as presented in the audited financial statements and information
included  elsewhere in this Report.  CAD 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.  CAD
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.

CAD  increased  $30,633  from  $526,398 in 1995 to  $557,031 in 1996.  Dividends
declared for the year ended December 31, 1996 were $481,688, representing 86.47%
of cash  available  for  distribution.  Dividends  declared  for the year  ended
December  31, 1995 were  $475,125,  representing  90.26% of cash  available  for
distribution.  The  increase  in CAD is  primarily  due  to  the  operations  of
Cambridge.







Inflation

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

Item 7.  Financial Statements

Financial  statements and supplementary  financial  information are contained on
pages F-1 to F-18 of this report.

Item 8.  Changes and Disagreements with Accountants on Accounting and Financial
Disclosure

The Company  dismissed BDO Seidman,  LLP as its independent  public  accountants
effective August 16, 1996.

During the Company's two fiscal years ended December 31, 1995 and the subsequent
interim  period  from  January  1,  1996  to  August  16,  1996,  there  were no
disagreements with the former accountants on any matter of accounting  principle
or practice, financial statement disclosure, or auditing scope or procedure. The
former accountants'  report on the financial  statements of the Company for each
of the two fiscal years ended December 31, 1995 was unqualified.

The Company engaged Ernst & Young, LLP as its new independent public accountants
effective with the dismissal of it former accountants.  During the Company's two
fiscal years ended  December  31, 1995 and the  subsequent  interim  period form
January 1, 1996 to August 16, 1996, there were no  consultations  with the newly
engaged  accountants  with  regard  to  either  the  application  of  accounting
principles as to any specific transaction, either completed or contemplated, the
type of  audit  opinion  that  would  be  rendered  on the  Company's  financial
statements, or any matter of disagreements with the former accountants.

The decision to change  accountants  was approved by all members of the Board of
Trust Managers of the Company.








PART III

Item 9.  Directors and Executive Officers, Promoters and Control Persons;
         Compliance with Section 16(a) of the Exchange Act

The  information  required by this Item 9 will be incorporated by reference from
the  Company's  definitive  Proxy  Statement  for its  1997  Annual  Meeting  of
Shareholders  to be filed  pursuant  to  Regulation  14A  promulgated  under the
Securities and Exchange Act of 1934,  which proxy statement is anticipated to be
filed within 120 days after the end of the Company's  fiscal year ended December
31, 1996.

Item 10.  Executive Compensation

The information  required by this Item 10 will be incorporated by reference from
the  Company's  definitive  Proxy  Statement  for its  1997  Annual  Meeting  of
Shareholders  to be filed  pursuant  to  Regulation  14A  promulgated  under the
Securities and Exchange Act of 1934,  which proxy statement is anticipated to be
filed within 120 days after the end of the Company's  fiscal year ended December
31, 1996.

Item 11.  Security Ownership of Certain Beneficial Owners and Management

The information  required by this Item 11 will be incorporated by reference from
the  Company's  definitive  Proxy  Statement  for its  1997  Annual  Meeting  of
Shareholders  to be filed  pursuant  to  Regulation  14A  promulgated  under the
Securities and Exchange Act of 1934,  which proxy statement is anticipated to be
filed within 120 days after the end of the Company's  fiscal year ended December
31, 1996.

Item 12.  Certain Relationships and Related Transactions

The information  required by this Item 12 will be incorporated by reference from
the  Company's  definitive  Proxy  Statement  for its  1997  Annual  Meeting  of
Shareholders  to be filed  pursuant  to  Regulation  14A  promulgated  under the
Securities and Exchange Act of 1934,  which proxy statement is anticipated to be
filed within 120 days after the end of the Company's  fiscal year ended December
31, 1996.

Item 13.  Exhibits and Reports on Form 8-K

(a) Exhibits

 (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:

No schedules are required.

(a) (3) Index to Exhibits:

See Index to Exhibits on page E-1 and E-2

(b) Reports on Form 8-K

None


<PAGE>




SIGNATURES

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

                                            REGISTRANT:


                              GROVE PROPERTY TRUST

Date:  March 31, 1997                       By:/s/ Joseph R. LaBrosse
                                               ----------------------
                                            Name:    Joseph R. LaBrosse
                                            Title:   Chief Financial Officer,
                                                     Secretary, Treasurer, and
                                                     Trust Manager


In accordance  with the 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.


Name                                Title                                 Date

                        Chairman of the Board of Trust Managers,
/s/ Damon D. Navarro    President, and Chief Executive Officer
Damon D. Navarro       (Principal Executive Officer)             March 31, 1997



                         Chief Financial Officer, Secretary,
                         Treasurer, and Trust Manager
/s/ Joseph R. LaBrosse   (Principal Financial and
Joseph R. LaBrosse       Accounting Officer)                     March 31, 1997



/s/ James F. Twadell    Trust Manager                            March 31, 1997
--------------------
James F. Twaddell



/s/ J. Joseph  Garrahy     Trust Manager                      March 31, 1997
----------------------
J. Joseph Garrahy



/s/ Harold Gorman          Trust Manager                       March 31, 1997
------------------
Harold Gorman

<PAGE>


              INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


The  following  financial  statements  of the  Registrant  and its  subsidiaries
required to be included in Item 13(a)(1) are listed below:

GROVE PROPERTY TRUST
                                                                        Page
                                                                        ----
 Report of Independent  Certified Public  Accountants F-2 - F-3 Balance Sheet as
 of December  31, 1995 F-4 Income  Statements  for the years ended  December 31,
 1996 and 1995 F-5 Statements of Shareholders' Equity for the years ended
   December 31, 1996 and 1995                                            F-6
 Statements of Cash Flows for the years ended December 31, 1996
   and 1995                                                              F-7
 Notes to Financial Statements                                       F-8 - F-14

                                      F-1

<PAGE>


REPORT OF INDEPENDENT AUDITORS

The Shareholders and Board of Trust Managers
Grove Property Trust

We have audited the accompanying  balance sheet of Grove Property Trust
as of  December  31,  1996 and the  related  statements  of  income,  changes in
shareholders'  equity,  and cash flows for the year then ended.  These financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our  opinion,  the  financial  statements  referred to above  fairly,  in all
material  respects,  the financial  position of Grove Property Trust at
December 31, 1996,  and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.


  /s/Ernst & Young
-----------------------------------
Ernst & Young, LLP


Hartford, Connecticut
February 28, 1997

                                      F-2

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Shareholders and Board of Trust Managers of
  Grove Property Trust
Hartford, Connecticut

We have audited the accompanying statements of income, shareholders' equity, and
cash flows for the year ended December 31, 1995. These financial  statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

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

In our  opinion,  the  financial  statements  referred to above  fairly,  in all
material  respects,  the results of its  operations and cash flows of Grove 
Property Trust for the year ended  December  31, 1995 in  conformity  with
generally accepted accounting principles.



/S/BDO Seidman
--------------

BDO Seidman, LLP


January 30, 1996

New York, New York

                                      F-3

<PAGE>

                        GROVE PROPERTY TRUST
                          BALANCE SHEETS
                                                                    December 31,
                                                                        1996    
                              ASSETS
Real estate assets:
        Land .................................................      $   920,293
        Buildings and improvements ...........................        8,528,075
        Furniture, fixtures and equipment ....................          349,768
                                                                    -----------
                                                                      9,798,136
        Less - accumulated depreciation ......................       (1,049,815)
                                                                    -----------
                Net real estate assets .......................        8,748,321

Cash and cash equivalents ....................................          381,340
Cash - resident security deposits ............................          157,537
Deferred charges, net of accumulated amortization
     of $5,762 and $11,736, respectively .....................          222,930
Other assets .................................................           10,482
                                                                    -----------

 Total assets ................................................      $ 9,520,610
                                                                    ===========
               LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
        Mortgage notes payable ...............................      $ 5,668,578
        Accounts payable, accrued expense and other ..........           72,054
        Due to affiliates ....................................           19,190
        Resident security deposits ...........................          157,537
        Dividends payable ....................................          120,750
                                                                    -----------

Total liabilities ............................................        6,038,109
                                                                    -----------

Commitments and subsequent event .............................             --

Shareholders' equity:
        Preferred shares, $.01 par value per share,
            4,000,000 shares authorized; no shares
            issued or outstanding ............................             --
        Common shares, $.01 par value per share,
            10,000,000 shares authorized; 525,000
            shares issued and outstanding ....................            5,250
        Additional paid-in capital ...........................        3,913,176
        Distributions in excess of earnings ..................         (435,925)
                                                                    -----------

Total equity .................................................        3,482,501
                                                                    -----------


Total liabilities and shareholders' equity ...................      $ 9,520,610
                                                                    ===========

                                      F-4


<PAGE>


                              GROVE PROPERTY TRUST
                                INCOME STATEMENTS




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

                                               1996            1995

Revenues:
    Rental income .......................   $2,046,390   $1,287,013
    Interest and other income ...........       35,849       29,902
                                                ------       ------

        Total revenues ..................    2,082,239    1,316,915
                                             ---------    ---------



Expenses:
    Property operating and maintenance ..      655,821      406,227
    Real estate taxes ...................      208,302      147,770
    Related party management fees .......      108,731       66,781
    General and administrative ..........       66,798       56,363
                                                ------       ------

        Total expenses ..................    1,039,652      677,141
                                             ---------      -------


                                             1,042,587      639,774

Interest expense ........................      394,657       85,103
Depreciation and amortization ...........      386,641      216,413
                                               -------      -------


Net income ..................               $  261,289   $  338,258
                                            ==========   ==========




Net income per common share ............   $     0.42   $     0.55
                                           ==========   ==========


Weighted average number of shares .......     620,130      620,130
                                              =======      =======


                                      F-5

<PAGE>

                        GROVE REAL ESTATE ASSET TRUST
                        STATEMENT OF SHAREHOLDERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
                                   (Unaudited)




                                                       Additional  Distributions
                                              Common     Paid-in    in Excess of
                                              Shares     Capital     Net Income
                                              ------     -------     ----------

Shareholders' equity, January  1, 1995....  $   5,250    3,913,176    (78,659)
        Net income ......................                             338,258
        Declared dividends ..............                            (475,125)
                                             --------   ---------    --------
Shareholders' equity, December 31, 1995         5,250    3,913,176   (215,526)
        Net income                                                    261,289
        Declared dividends..............                             (481,688)
                                             --------   ---------    ---------
Amounts at September 30, 1996 (unaudited)  $   5,250    3,913,176    (435,925)
                                            =========    =========    ========

                             See accompanying notes

                                     F-6
<PAGE>

                              GROVE PROPERTY TRUST
                            STATEMENTS OF CASH FLOWS
                                                       Year Ended December 31,
                                                 -------------------------------
                                                           1996        1995
                                                           ----        ----

Cash flows from operating activities:
 Net income ........................................... $261,2$9     $338,258
 Adjustments to reconcile net income to net cash
 provided by operating activities:
       Depreciation and amortization ..................  386,641      216,413
       Imputed interest - mortgage ....................   37,508       34,892
       (Increase) decrease in other assets ............   (7,670)       4,472
       Increase (decrease) in accounts payable, accrued
               expenses and other .....................   40,751       (8,891)
                                                         ------       ------

             Net cash provided by operating activities   718,519      585,144
                                                         -------      -------
Cash flows from investing activities:
 Deferred charges ..................................... (174,079)        --
 Other ................................................   (2,714)        --
 Additions to real estate assets ...................... (125,634)     (99,002)
                                                        --------      -------

             Net cash used in investing activities .... (302,427)     (99,002)
                                                        --------      -------
Cash flows from financing activities:
 Net proceeds from mortgage payable on acquisition ....  220,198         --
 Financing costs ......................................  (21,000)     (23,000)
 Repayment of mortgage payable ........................  (58,961)        --
 Payments to affiliates ...............................  (78,338)     (22,929)
 Dividends paid ....................................... (480,376)    (472,500)
                                                        --------     --------

                  Net cash used in financing activities (418,477)    (518,429)
                                                        --------     --------
Net decrease in cash and cash equivalents .............   (2,385)     (32,287)

Cash and cash equivalents, beginning of period ........  383,725      416,012
                                                         -------      -------


Cash and cash equivalents, end of period .............. $381,340     $383,725
                                                         =======      =======


                                      F-7


                              GROVE PROPERTY TRUST

                          Notes To Financial Statements

1.   FORMATION AND BUSINESS OF THE COMPANY

     Grove Property  Trust (the "Company" or "GPT"),  formerly Grove Real Estate
     Asset Trust  ("GREAT")  was  organized in the State of Maryland on April 4,
     1994, as a Real Estate Investment Trust ("REIT").  As of December 31, 1996,
     the  Company  operated  four  properties  with a total  of 257  residential
     apartments.   The  Company  purchased  three  properties,   (the  "Original
     Properties")  on June 23,  1994,  and the fourth  property  was acquired in
     January 1996 (collectively, the "Properties").

2.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     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 the  purchase  to be cash
     equivalents.

     Real Estate Assets and Depreciation

     The Original  Properties were recorded at their  historical cost due to the
     controlling  relationship between the principals of the entities previously
     operating  the  Properties  (the  "Grove  Affiliates").  The portion of the
     purchase  price   attributable  to  the  net  assets  acquired  from  Grove
     Affiliates exceeds their amortized historical cost. Accordingly, the excess
     amount is reflected as a decrease in equity for  accounting  purposes.  All
     real estate assets purchased  subsequent to the initial  acquisitions  have
     been recorded at cost.  Depreciation  is provided  using the  straight-line
     method over the estimated useful lives of the assets (7 to 27.5 years).

     Long-Lived Assets

     In March 1995, the Financial Accounting Standards Board issued Statement of
     Financial  Accounting  Standards No. 121, "Accounting for the Impairment of
     Long-Lived  Assets and Long-Lived  Assets to be Disposed of" (FAS No. 121),
     which 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 undisclosed
     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.

     Per Share Data

     Net income  per common  share is based on the  weighted  average  number of
     shares outstanding during each year. Common stock equivalents  (options and
     warrants)  did not have a  dilutive  effect on net income per share for any
     year  presented.  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-8

<PAGE>

     Stock-Based Compensation

     Effective in fiscal year 1996,  the Company  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.
                                  
     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 (the "Code").
     A REIT will generally not be subject to federal income tax to the extent it
     distributes  at least 95% of its  taxable  income to its  shareholders  and
     complies 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:

                                               1996        1995
                                              --------   ------
     Ordinary income                          97.46%       83.22%
     Return of principal                       2.54%       16.78%

     Advertising

     The Company expenses advertising costs as incurred.  Advertising costs were
     $24,000 and $17,000 in 1996 and 1995, respectively.

     Deferred Charges

     Deferred  charges,  consisting  principally of loan costs and UPREIT costs,
     are  amortized  on a  straight  line  basis  over the  term of the  related
     obligation.

     Rental Income

     Rental income attributable to leases is recognized on a straight-line basis
     over the term of the leases, which are generally for one year.

                                      F-9
<PAGE>

3.   Acquisition

     On January 12, 1996,  the Company  purchased  the assets and  operations of
     Grove Cambridge Associates Limited Partnership ("Cambridge"),  a ninety-two
     multifamily  apartment  complex  located  in  Norwich,   Connecticut,   for
     $4,250,000,  which was funded with a $4,500,000 mortgage note payable.  The
     results of Cambridge's operations have been combined with those of the
     Company since the date of acquisition.

     The  unaudited pro forma  information  for the period set forth below gives
     effect to the  transaction  as if it had  occurred at the  beginning of the
     period.  The pro forma information is presented for informational  purposes
     only and is not  necessarily  indicative of the results of operations  that
     actually would have been achieved had the acquisition  been  consummated as
     of that time. The pro forma results for 1996 are not  materially  different
     from the reported amounts.

     Pro Forma Year Ended December 31, 1995:

     Revenues                               $2,079
     Net income                                278
     Net income per common share            $ 0.45

                                      F-10
<PAGE>


4.   MORTGAGE NOTES PAYABLE

     Mortgage notes payable consist of the following:

                                                  1996
       Southington Apartments note           $  1,227,539
       Cambridge Estates note                   4,441,039
                                                ---------
            Total                            $  5,668,578
                                                =========

     The mortgage note on the Southington  Apartments  property which has a face
     amount of $1,250,000,  has an imputed interest rate of 7.25% due in monthly
     interest  payments of $4,167  through June 1997 and monthly  principal  and
     interest  payments of $8,527 through July 2013. The note is  collateralized
     by the  property  and 15% of the  face  amount  is  guaranteed  by  certain
     executive officers and shareholders of the Company.

     The Cambridge note payable had an original  principal balance of $4,500,000
     with interest payable at 7.04%.  Monthly principal and interest payments of
     $31,920 are due through  January 2006.  The note is  collateralized  by the
     Cambridge   property  and  by  first   mortgage  liens  on  two  additional
     properties.

     Aggregate annual maturities of mortgage notes payable are as follows:

               Years ending December 31,

                         1997                  $
                                                     54,512
                         1998                        86,056
                         1999                        92,418
                         2000                       102,579
                         2001                       110,951
                      Thereafter                  5,222,062
                                                  ---------
                         Total                  $ 5,668,578
                                                 ==========

     Interest paid was $379,666 and $84,892 in 1996 and 1995, respectively.

5.   INITIAL CREDIT FACILITY

     The Company  entered into a Initial  Credit  Facility  concurrent  with its
     initial public offering ("IPO") in 1994 (IPO).  The Credit Facility,  which
     provided for up to $3.0 million in  borrowings,  was expected to be used to
     finance acquisitions of properties, re-development and renovation costs and
     expenses,  and for working capital purposes related to future acquisitions.
     The Credit Facility was not drawn upon, and was terminated in January 1996.

6.   1994 STOCK OPTION PLAN

     The Company has adopted a stock option plan (the "Plan") for key  employees
     and  non-employees of the Company.  Options are granted at the market price
     of the Company's common stock on the date of grant,  become  exercisable in
     increments of 33 1/3% per year on each of the first three  anniversaries of
     the date of grant and have a maximum  term of ten years.  At  December  31,
     1996, no options had been  exercised.  Information  regarding the Company's
     stock option plan is summarized below.

                                      F-11

<PAGE>

                                     1996                         1995
                           --------------------------    ----------------------
                                            Weighted                  Weighted
                                             Average                   Average
                                             Exercise                  Exercise
                             Options          Price      Options        Price
                             -------          -----      -------        -----
 Outstanding at beginning
     of year                   69,689       $   9.31        66,146     $    9.42
 Granted                       48,428       $   7.29         3,543     $    7.20
                               ------                      -------
 Outstanding at end
   of year                    118,117       $   8.48        69,689     $    9.31
                              =======                       ======

 Options exercisable at
   end of year                 45,272       $   9.36        22,049     $    9.42
                               ======                       ======

     The Company  accounts for stock option  grants under its Plan in accordance
     with APB No. 25. Accordingly,  no compensation cost has been recognized for
     stock option  grants since the options  have  exercise  prices equal to the
     market value of the  Company's  common stock at the date of grant.  The pro
     forma  compensation  cost for the Company's  Plan  determined in accordance
     with FAS No. 123 was not material for 1996 and 1995.

7.   UNDERWRITER WARRANTS

     In  conjunction  with  the  IPO,  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, 1996.

8.   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 provides operating and support functions requisite
     to  the  operation  of  the  Properties.  The  Agreeement  provides  for  a
     management  fee equal to 5% of gross  monthly  revenues,  as  defined,  and
     expires  June 30,  1997.  Management  fees  incurred  in 1996 and 1995 were
     $108,731 and $66,781, respectively.

     Operating Expenses and Non-Operating Expenses

     Certain operating and  non-operating  expenses include amounts allocated to
     the Company by GPS.  These  charges  reflect an  allocation  of the cost of
     services  required by the Company,  which are outside the scope of services
     customarily  included  in the  property  management  fees.  Total  costs of
     $10,952 and $0 were allocated in 1996 and 1995, respectively.


                                      F-12

<PAGE>


     Rent to Related Party

     The Company's  executive offices are leased from an affiliated  company for
     $500 per month  under a three year lease which  expires in June 1997;  rent
     expense related thereto was $6,000 in 1996 and 1995.

9.   FINANCIAL INSTRUMENTS

The carrying value of cash and cash  equivalents,  accounts payable and mortgage
notes payable  approximate  their fair value based on anticipated cash flows and
current market conditions.

10.  SUBSEQUENT EVENT

On March 14, 1997, GPT completed a series of transactions  pursuant to which the
Company was transformed  into a  self-administered  and  self-managed  REIT with
control  over  a  portfolio  of  23  multi-family  residential  projects  and  a
neighborhood shopping center in the Northeastern United States. A summary of the
steps involved in these Consolidation Transactions are as follows:

      GPT  formed  an  Operating  Partnership  to serve as the  vehicle  for the
     consolidation  of ownership  and/or control of the operations and assets of
     the Company.

      Pursuant to an Exchange Offer,  the Operating  Partnership  purchased from
     the Limited  Partners of certain  Property  Partnerships,  the  outstanding
     partnership  units of each of the  Property  Partnerships  in exchange  for
     Common Units of the Operating  Partnership,  or, in certain  circumstances,
     cash.  The  number of  Common  Units  received  by a  Limited  Partner  was
     calculated based upon such partners' interest in the applicable partnership
     as applied to the value of the property partnership associated therewith.

      Immediately prior to the consummation of the  Consolidation  Transactions,
     GPT declared and issued a stock dividend  aggregating  26,250 Common Shares
     and concurrently effected a stock split of 1.125 to 1, thereby issuing on a
     pro rata  basis a total of  95,130  Common  Shares  to the  holders  of the
     currently issued and outstanding Common Shares.

                                      F-13

<PAGE>


      GPT issued 3,333,333 Common Shares to new equity investors in exchange for
     $30 million of new equity T investments.

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

     In exchange  for the above,  the Grove  Companies  received an aggregate of
     904,867  Common Units in the  Operating  Partnership  and a cash payment of
     $177,669 from GPT, and GPT received  620,130  Common Units in the Operating
     Partnership. Additionally, GPT contributed to the Operating Partnership the
     gross  proceeds  received  from new equity  investments  in exchange  for a
     number of  additional  Common  Units  equal to the number of Common  Shares
     issued by GPT to the new equity investors.

      In  connection  with  the   Consolidation   Transactions,   the  Operating
     Partnership  entered into a three-year  secured  revolving  acquisition and
     working capital facility of approximately  $25 million and an approximately
     $15.1 million ten-year term mortgage loan.

     The  Company  will  use a  portion  of the  proceeds  from  the new  equity
     investment,  together with  borrowings  under the new credit  facilities to
     paydown or refinance  approximately $39.3 million of mortgage  indebtedness
     of the Property  Partnerships and to acquire certain minority  interests in
     certain of the Property Partnerships.

The following  unaudited pro forma  information  for the year ended December 31,
1996 and 1995 is presented as if the Consolidation  Transactions had occurred at
the beginning of 1995. The unaudited  information  does not purport to represent
what GPT's results of operations would have actually been if such  transactions,
in fact,  had occurred on January 1, 1995,  nor does it purport to represent the
results of operations for future periods.

                                              1996         1995
                                              ----         ----
Revenues                                  $ 16,185     $  15,120
Net income before extraordinary items          2,335         482
Earnings per share                         $    0.59   $    0.19

The following  unaudited pro forma balance sheet  information as of December 31,
1996 is presented as if the Consolidation Transactions occurred on that date

Real estate assets                         $ 63,624
Total assets                                 70,207
Total debt                                   34,094
Shareholders' equity                         36,113

                                      F-14
                                                      

                                  EXHIBIT INDEX


Exhibit 
 No        Exhibit                                                     Page No.
-----      -------                                                     -------
3.1   Third Amended and Restated Declaration of Trust of the Registrant.
      Incorporated by reference from Exhibit No. 3.1 to Current 
      Report on Form 8-K filed March 31, 1997, File No. 1-13080.

3.2   Amended and Restated By-laws of the Registrant. Incorporated by reference
      from Exhibit No. 3.2 to Current Report on Form 8-K filed March 31, 1997,
      File No. 1-13080.

10.1  Securities Purchase Agreement, dated March 14, 1997, between the
      Registrant and Morgan Stanley Group Inc. Incorporated by reference from
      Exhibit No. 10.1 to Current Report on Form 8-K filed March 31, 1997, File
      No. 1-13080.

10.2  Securities Purchase Agreement, dated March 14, 1997, between the
      Registrant and ABKB/LaSalle Securities Limited. Incorporated by reference
      from Exhibit No. 10.2 to Current Report on Form 8-K filed March 31, 1997,
      File No. 1-13080.

10.3  Form of Securities Purchase Agreement executed by other Investors in the
      Private Placement. Incorporated by reference from Exhibit No. 10.3 to
      Current Report on Form 8-K filed March 31, 1997, File No. 1-13080.

10.4 Registration Rights Agreement executed by the Investors. Incorporated by
     reference from Exhibit No. 10.4 to Current Report on Form 8-K filed March
     31, 1997, File No. 1-13080.

10.5 Multifamily Note, dated March 14, 1997, among Citicorp Real
     Estate,   Inc.,   GR-Properties  III  Limited  Partnership,
     Foxwoodburg,   L.P.,   Grove-Westfield  Associates  Limited
     Partnership,   Grove-West  Springfield  Associates  Limited
     Partnership and GR-Westwynd Associates Limited Partnership.
     Incorporated  by reference from Exhibit No. 10.5 to Current
     Report on Form 8-K filed March 31, 1997, File No. 1-13080.

10.6 Cash  Management  Agreement,  dated as of March  14,  1997,
     among Citicorp Real Estate, Inc., GR-Properties III Limited
     Partnership,  Foxwoodburg, L.P., Grove-Westfield Associates
     Limited  Partnership,   Grove-West  Springfield  Associates
     Limited  Partnership  and  GR-Westwynd  Associates  Limited
     Partnership.  Incorporated  by  reference  from Exhibit No.
     10.6 to Current  Report on Form 8-K filed  March 31,  1997,
     File No. 1-13080.

                                      E-1

<PAGE>



10.7 Form of Multifamily Open-End Mortgage Deed, Assignment of Rents and
     Security Agreement, executed by Citicorp Real Estate, Inc. and each of
     GR-Properties III Limited Partnership, Foxwoodburg, L.P., Grove-Westfield
     Associates Limited Partnership, Grove-West Springfield Associates Limited
     Partnership and GR-Westwynd Associates Limited Partnership. Incorporated
     by reference from Exhibit No. 10.7 to Current Report on Form 8-K filed
     March 31, 1997, File No. 1-13080.

10.8 Pledge Agreement, dated as of March 14, 1997, between the Operating
     Partnership and Citicorp Real Estate, Inc. Incorporated by reference from
     Exhibit No. 10.8 to Current Report on Form 8-K filed March 31, 1997, File
     No. 1-13080.

10.9 Registration Rights Agreement, dated March 14, 1997, between the
     Registrant and certain partners of the Operating Partnership.
     Incorporated by reference from Exhibit No. 10.9 to Current Report on Form
     8-K filed March 31, 1997, File No. 1-13080.

10.10 1994 Share Option Plan. Incorporated by reference from Exhibit No. 10.16
      to Registration Statement on Form SB-2, File No. 33-76732.
10.11 1996 Share Incentive Plan, dated March 14, 1997. Incorporated by
      reference from Exhibit No. 10.10 to Current Report on Form 8-K filed
      March 31, 1997, File No. 1-13080.

10.12 Pledge Agreement, dated March 14, 1997, among Damon Navarro, Brian
      Navarro, Edmund Navarro, Joseph LaBrosse, Gerald McNamara, National
      Realty Services Limited Partnership, GIG, Burgundy Associates Limited
      Partnership, Grove Equity Partnership, Grove Holding Co. Inc. and the
      Registrant. Incorporated by reference from Exhibit No. 10.11 to Current
      Report on Form 8-K filed March 31, 1997, File No. 1-13080.

10.13 Noncompetition Agreement among the Registrant, the Operating Partnership,
      National Realty Services Limited Partnership, GIG and Burgundy Associates
      Limited Partnership. Incorporated by reference from Exhibit No. 10.12 to
      Current Report on Form 8-K filed March 31, 1997, File No. 1-13080.

10.14 Form of Noncompetition Agreement executed by each of Damon Navarro, Brian
      Navarro, Joseph LaBrosse, Edmund Navarro and Gerald McNamara.
      Incorporated by reference from Exhibit No. 10.13 to Current Report on
      Form 8-K filed March 31, 1997, File No. 1-13080.

                                      E-2
<PAGE>


10.15 Employment Agreement, dated March 14, 1997, between the Registrant and
      Damon Navarro. Incorporated by reference from Exhibit No. 10.14 to
      Current Report on Form 8-K filed March 31, 1997, File No. 1-13080.

10.16 Employment Agreement, dated March 14, 1997, between the Registrant and
      Brian Navarro. Incorporated by reference from Exhibit No. 10.15 to
      Current Report on Form 8-K filed March 31, 1997, File No. 1-13080.

10.17 Employment Agreement, dated March 14, 1997, between the Registrant and
      Edmund Navarro. Incorporated by reference from Exhibit No. 10.16 to
      Current Report on Form 8-K filed March 31, 1997, File No. 1-13080.

10.18 Employment Agreement, dated March 14, 1997, between the Registrant and
      Joseph LaBrosse. Incorporated by reference from Exhibit No. 10.17 to
      Current Report on Form 8-K filed March 31, 1997, File No. 1-13080.

10.19 Employment Agreement, dated March 14, 1997, between the Registrant and
      Gerald McNamara. Incorporated by reference from Exhibit No. 10.18 to
      Current Report on Form 8-K filed March 31, 1997, File No. 1-13080.

10.20 Form of Contribution Agreement among Grove Real Estate Asset Trust, Grove
      Operating, L.P. and certain other parties. Incorporated by reference from
      Exhibit No. 10.1 to Current Report on Form 8-K filed February 13, 1997,
      File No. 1-13080.

10.21 Form of Agreement of Limited Partnership of Grove Operating, L.P., among
      Grove Real Estate Asset Trust and the other partners named therein.
      Incorporated by reference from Exhibit No. 10.2 to Current Report on Form
      8-K filed February 13, 1997, File No. 1-13080.

10.22 Form of Indemnification Agreement by and between GREAT, the Trust
      Managers and the Executive Officers. Incorporated by reference from
      Exhibit No. 10.18 to Registration Statement on Form SB-2, File No.
      33-76732.
10.23 Assumption of Mortgage Deed and Security Agreement made June 23, 1994 by
      and among Southington Baron Limited Partnership, Charles D. Gersten, Ada
      C. Berin, Grove Real Estate Asset Trust, Damon D. Navarro and Brian A.
      Navarro. Incorporated by reference from Exhibit No. 10.22 to Annual
      Report on Form 10-KSB for the year ended December 31, 1994, File No.
      1-13080.

10.24 Mortgage Note from Southington Baron Limited Partnership to Charles D.
      Gersten and Ada C. Berin dated June 8, 1993 in the original principal
      amount of $1,250,000. Incorporated by reference From Exhibit No. 10.23 to
      Annual Report on form 10-KSB for the year ended December 31, 1994, File
      No. 1-13080.

10.25 Purchase and Sale Agreement between Grove Real Estate Asset Trust and
      Grove Cambridge Associates Limited Partnership. Incorporated by reference
      from Exhibit No. 1 to Current Report on Form 8-K filed October 30, 1995,
      File No. 1-13080.

10.26 Mortgage  Note from Grove Real Estate  Asset Trust to First
      Union Bank of  Connecticut  dated  January  11, 1996 in the
      principal  amount of $4,500,000.  Incorporated by reference
      from Exhibit No. 10.25 to Annual  Report on Form 10-KSB for
      the year ended December 31, 1995, File No. 1-13080.

16.1  Letter of former Accountants.  Incorporated by reference from Exhibit No.
      16.1 to Current Report on Form 8-K filed August 23, 1996, File No.
      1-13080.

27    Financial Data Schedule.

                                      E-3