<PAGE>


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

              Annual Report Pursuant to Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                                                                Commission File
For the year ended December 31, 1998                            No.    0-10404

                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
        (Exact name of small business issuer as specified in its charter)

             Massachusetts                          04-2720480
   (State or other jurisdiction of               (I.R.S.  Employer
     incorporation or organization)              Identification No.)

    5 Cambridge Center, Cambridge, Massachusetts         02142
      (Address of principal executive offices)        (Zip Code)

         Registrant's telephone number including area code (617)234-3000

        Securities registered pursuant to Section 12(b) of the Act: None

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

                      Units of Limited Partnership Interest
                                (Title of Class)

Indicate by check mark whether Registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-B is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements   
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]

Registrant's revenues for its most recent fiscal year were $1,139,000.

No market for the Limited Partnership Units exists and therefore, a market value
for such Units cannot be determined.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      None


<PAGE>

                                     PART I
                                     ------

Item 1.  Description of Business.
-------  ------------------------

         Winthrop Partners 81 Limited Partnership (the "Partnership") was
organized under the Uniform Limited Partnership Act of the Commonwealth of
Massachusetts on February 9, 1981, for the purpose of owning and leasing
commercial and industrial real properties. The Partnership was initially
capitalized with contributions of $1,000 from each of the two General Partners
and $5,000 from the Initial Limited Partner. In June 1982, the Partnership sold
pursuant to a Registration Statement filed with the Securities and Exchange
Commission 25,099 units of limited partnership interest ("Units") at a purchase
price of $500 per Unit, representing capital contributions from Limited Partners
of $12,549,500.

         The Partnership's General Partners are One Winthrop Properties, Inc., a
Massachusetts limited partnership (the "Managing General Partner"), and
Linnaeus-Hampshire Realty Limited Partnership, a Massachusetts limited
partnership (the "Associate General Partner"). One Winthrop is a wholly-owned
subsidiary of First Winthrop Corporation ("First Winthrop"), a Delaware
corporation which is wholly owned by Winthrop Financial Associates, A Limited
Partnership ("WFA"), a Maryland limited partnership.

         The Partnership's only business is owning and leasing improved real
estate.

         The Partnership has invested all of the net proceeds of the Limited
Partners' capital contributions, other than approximately $165,000 originally
set aside as reserves, in ten real properties. The Partnership's reserves at
December 31, 1998 net of accounts payable, accrued expenses and distributions
payable to Partners is approximately $420,000 which is invested in money market
instruments. All but one of the Partnership's original properties have been
sold: one in 1989; one in 1991; three in 1992; two in 1993; one in 1995 and one
in 1998. See Item 2, "Description of Properties" for a description of the
Partnership's remaining property. Rental income will be affected by the terms of
any new leases, any tenant improvements and leasing costs associated with
renewing the current lease with the existing tenant or signing leases with new
tenants, and the loss of rent during any period when the remaining property is
not under lease.


                                       2
<PAGE>


Property Matters
----------------

         GTE North Incorporated, Columbus, Ohio - On May 21, 1998, the
Partnership sold its Columbus, Ohio property (formerly leased to GTE North
Incorporated) for $1,910,000 (net of closing costs of $93,000), resulting in a
gain of $967,000. The Partnership distributed the net proceeds to it partners
during the third quarter of 1998. See "Item 5, Market For Registrant's Common
Equity and Related Stockholder Matters."

         Frank's Nursery and Crafts, Columbus, Ohio. The sole tenant at the
property exercised an option to extend the term of its lease for five years, at
an increase in rent of 8%. The Partnership is currently marketing this property
for sale. See "Item 2, Properties"

Employees
---------

         The Partnership does not have any employees. Services are performed for
the Partnership by its Managing General Partner, and agents retained by the
Managing General Partner, including an affiliate of the General Partners,
Winthrop Management.

Item 2.  Description of Properties.
-------  --------------------------

         The Partnership's remaining property, which is owned in fee, is
described below.

                                    Total Cost      Original
    Tenant            Date  of       of the        Portfolio      Building  
Property/Location     Purchase      Property(1)    Percentage(2)  Size (sq.ft.)
-----------------     --------      -----------    -------------  -------------
Frank's Nursery
and Crafts, Inc.
  Columbus, OH         1/25/83       $  889,776             7.0         16,500
-------------------

(1)      Includes acquisition fees and expenses.
(2)      Represents the percentage of original cash invested in the individual
         property of the total cash invested in all properties.

         The Partnership owns the fee interest in its remaining property and
acquired all of its properties solely with Partnership capital and without any
mortgage financing. The property is commercial in nature and is leased under a
triple net lease to a single tenant.

         During the first quarter of 1997, the Partnership was notified that
Frank's was exercising its option to renew the lease term for the first five
year renewal option. As a result, the lease with Frank's Nursery is now
scheduled to terminate,


                                       3
<PAGE>


subject to further extension, on January 25, 2003. The annual lease payments
during the renewal term are scheduled to be $107,250, payable in monthly
installments. Frank's operates a retail nursery and craft store at the property.

         Frank's has exclusive control over the day-to-day business operations
conducted at the Property as well as decisions with respect to the initiation of
any development or renovations at the Property. The Partnership has limited
approval rights over any such renovation programs proposed by Frank's. Until
such time as the lease expires, the Partnership has no responsibility for any
maintenance, repairs or improvements associated with the Property. In addition,
the tenant at the Property is responsible for all insurance requirements and the
payment of real estate taxes directly to the taxing authorities during the term
of the lease. The Partnership believes that its remaining property is adequately
insured.

         Frank's is subject to competition from other companies offering similar
products in the location of the property leased by such tenant. The Partnership
has no control over the tenant's responses to competitive conditions impacting
the businesses operated by the tenants at each of the properties. In addition,
the Partnership will be subject to significant competition in attracting tenants
upon the expiration or termination of either of the leases with its tenants.

         In accordance with Statement of Financial Accounting Standards No. 13,
the Partnership's lease with respect to its remaining property was reclassified
as an operating lease from a direct financing lease on renewal. In addition, the
Partnership is currently marketing this property for sale.

Item 3.  Legal Proceedings.
-------  ------------------
         The Partnership is not a party, nor are any of its properties subject,
to any material pending legal proceedings.

Item 4.  Submission of Matters to a Vote of Security Holders.
-------  ----------------------------------------------------
         No matters were submitted to a vote of security holders.


                                       4
<PAGE>


                                     PART II

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

         There is no established public market for the Units. Trading in the
Units is sporadic and occurs solely through private transactions.

         As of February 1, 1999, there were 1,245 holders of 25,109 outstanding
Units.

         The Amended and Restated Limited Partnership Agreement of the
Partnership, dated as of June 2, 1981 requires that any Cash Available for
Distribution (as defined therein) be distributed quarterly to the Partners in
specified proportions and priorities. There are no restrictions on the
Partnership's present or future ability to make distributions of Cash Available
for Distribution. During the years ended December 31, 1998 and 1997, Registrant
has made the following cash distributions with respect to the Units to holders
thereof as of the dates set forth below in the amounts set forth opposite such
dates:

         Distribution with                 Amount of Distribution
         Respect to Quarter Ended          Per Unit
         ------------------------          --------
                                           1998                      1997
                                           ----                      ----
         March 31                             -                         -
         June 30                          76.07                         -
         September 30                         -                         -
         December 31                       6.01                         -


                                       5
<PAGE>


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

         The matters discussed in this Form 10-KSB contain certain
forward-looking statements and involve risks and uncertainties (including
changing market conditions, competitive and regulatory matters, etc.) detailed
in the disclosure contained in this Form 10-KSB and the other filings with the
Securities and Exchange Commission made by the Partnership from time to time.
The discussion of the Partnership's liquidity, capital resources and results of
operations, including forward-looking statements pertaining to such matters,
does not take into account the effects of any changes to the Partnership's
operations. Accordingly, actual results could differ materially from those
projected in the forward-looking statements as a result of a number of factors,
including those identified herein.

         This item should be read in conjunction with the financial statements
and other items contained elsewhere in the report.

Liquidity and Capital Resources
-------------------------------

         The Partnership's remaining property is a retail store, which is leased
to a single tenant pursuant to a triple net lease. The Partnership is currently
marketing its remaining property for sale. If the Partnership is successful in
obtaining a purchaser, the Partnership will be liquidated. The recently extended
lease with Frank's Nursery and Crafts, Inc. expires in January 2003, subject to
extension. The lease was extended during 1998 at an increase in rent of 8%. On
May 21, 1998, the Partnership sold its Columbus, Ohio property, which was
formerly leased to GTE North Incorporated (the "GTE Lease"), for $1,910,000 (net
of closing costs of $93,000) resulting in a gain of $967,000 for financial
reporting purposes. The Partnership distributed the net sale proceeds of
$1,910,000 ($76.07 per Unit) during August 1998 and has made no other
distributions during 1997 or 1998. At December 31, 1998, the Partnership
recorded an accrued distribution payable of $151,000.

         The Partnership receives rental income from its leased property which
is its primary source of liquidity. Pursuant to the terms of the lease, the
tenant is responsible for substantially all of the operating expenses with
respect to the property including maintenance, capital improvements, insurance
and taxes.


                                       6
<PAGE>


         The level of liquidity based on cash and cash equivalents experienced a
$63,000 increase at December 31, 1998, as compared to December 31, 1997. The
Partnership's $60,000 of cash provided by operating activities and $1,913,000 of
cash provided by investing activities was significantly offset by cash used in
financing activities of $1,910,000. The Partnership received $1,910,000 of
proceeds on the sale of its Columbus, Ohio property which were subsequently
distributed. At December 31, 1998, the Partnership had approximately $581,000 in
cash and cash equivalents which has been invested primarily in money market
mutual funds.

         The Partnership requires cash primarily to pay general and
administrative expenses. In addition, if the Partnership is unable to sell its
remaining property prior to its lease expiration, extend the current lease or
re-let the property upon the expiration of the lease terms, the Partnership
would be responsible for operating expenses, such as real estate taxes,
insurance and utility expenses associated with the property.

Results of Operations
---------------------

         Net income increased by $1,024,000 for the year ended December 31,
1998, as compared to 1997, primarily due to the gain of $967,000 on the sale of
the Columbus, Ohio property.

         Revenues, excluding the gain on sale, decreased by $27,000 for the year
ended December 31, 1998, as compared to 1997, primarily due to the expiration of
the GTE Lease in April 1997. The decrease in revenues was due to decreases in
rental income of $25,000, interest income from financing leases of $13,000 and
other income of $10,000, which was partially offset by an increase in interest
income on short-term investments of $21,000. Interest on short-term investments
increased due to the net proceeds received from the sale of the property.
Expenses declined due to decreases in depreciation expense of $48,000,
management fees of $2,000, general and administrative expenses of $14,000, and
operating costs of $20,000 which declined due to the sale of the Columbus, Ohio
property, which was vacant prior to its sale. Depreciation expense declined due
to the Partnership not recording depreciation on the Dublin, a suburb of
Columbus, Ohio property during 1998, as a result of the Partnership marketing
the property for sale.


                                       7
<PAGE>


Year 2000
---------

         The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. The Registrant
is dependent upon the Managing General Partner and its affiliates for management
and administrative services. Any computer programs or hardware that have
date-sensitive software or embedded chips may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, or engage
in similar normal business activities.

         During the first half of 1998, the Managing General Partner and its
affiliates completed their assessment of the various computer software and
hardware used in connection with the management of the Registrant. This review
indicated that significantly all of the computer programs used by the Managing
General Partner and its affiliates are off-the-shelf "packaged" computer
programs which are easily upgraded to be Year 2000 compliant. In addition, to
the extent that custom programs are utilized by the Managing General Partner and
its affiliates, such custom programs are Year 2000 compliant.

         Following the completion of its assessment of the computer software and
hardware, the Managing General Partner and its affiliates began upgrading those
systems which required upgrading. To date, significantly all of these systems
have been upgraded. The Registrant has to date not borne, nor is it expected
that the Registrant will bear any significant cost, in connection with the
upgrade of those systems to requiring remediation. It is expected that all
systems will be remediated, tested and implemented during the first half of
1999.

         To date, the Managing General Partner is not aware of any external
agent with a Year 2000 issue that would materially impact the Registrant's
results of operations, liquidity or capital resources. However, the Managing
General Partner has no means of ensuring that external agents will be Year 2000
compliant. The Managing General Partner does not believe that the inability of
external agents to complete their Year 2000 resolution process in a timely
manner will have a material impact on the financial position or results of
operations of the Registrant. However, the effect of non-compliance by external
agents is not readily determinable.


                                       8
<PAGE>


Item 7.  Financial Statements

                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------

                              FINANCIAL STATEMENTS
                              --------------------

                     YEARS ENDED DECEMBER 31, 1998 and 1997
                     --------------------------------------

                                      INDEX
                                      -----

                                                                         Page
                                                                         ----

Independent Auditors' Report.............................................F - 2

Financial Statements:

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

Statements of Income for the Years Ended
     December 31, 1998 and 1997..........................................F - 4

Statements of Partners' Capital for the Years Ended
     December 31, 1998 and 1997..........................................F - 5

Statements of Cash Flows for the Years Ended
     December 31, 1998 and 1997..........................................F - 6

Notes to Financial Statements............................................F - 7




                                      F-1
<PAGE>


                          Independent Auditors' Report
                          ----------------------------

To the Partners
Winthrop Partners 81 Limited Partnership

We have audited the accompanying balance sheets of Winthrop Partners 81 Limited
Partnership (a Massachusetts limited partnership) as of December 31, 1998 and
1997, and the related statements of income, partners' capital and cash flows for
the years then ended. These financial statements are the responsibility of the
Partnership's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Winthrop Partners 81 Limited
Partnership as of December 31, 1998 and 1997, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.

                                                    Certified Public Accountants

New York, New York
January 14, 1999


                                      F-2
<PAGE>

                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------



                                 BALANCE SHEETS
                                 --------------
                        (In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
                                                                                  DECEMBER 31,
                                                                  ---------------------------------------------
                                                                          1998                    1997
                                                                  ---------------------    --------------------

ASSETS
------

<S>                                                               <C>                       <C>
Real Estate Leased to Others:

Accounted for under the operating method,
     at cost, net of accumulated depreciation of $906             $                  -   $               1,353
Accounted for under the operating method and held
     for sale                                                                      554                       -
Accounted for under the financing method                                             -                     147
                                                                  ---------------------    --------------------
                                                                                   554                   1,500

Other Assets:

Cash and cash equivalents                                                          581                     518
Other assets                                                                         5                      21
                                                                  ---------------------    --------------------

         Total Assets                                             $              1,140     $             2,039
                                                                  =====================    ====================

LIABILITIES AND PARTNERS' CAPITAL
---------------------------------

Liabilities:

Accounts payable and accrued expenses                             $                 10     $                50
Distributions payable to partners                                                  151                       -
                                                                  ---------------------    --------------------
         Total Liabilities                                                         161                      50
                                                                  ---------------------    --------------------

Partners' Capital:

Limited Partners -
   Units of Limited Partnership Interest,
   $500 stated value per Unit; authorized-70,010 Units;
   issued and outstanding - 25,109 Units                                         1,242                   2,268
General Partners' Deficit                                                         (263)                   (279)
                                                                  ---------------------    --------------------
         Total Partners' Capital                                                   979                   1,989
                                                                  ---------------------    --------------------
         Total Liabilities and Partners' Capital                  $              1,140     $             2,039
                                                                  =====================    ====================


</TABLE>


                       See notes to financial statements.


                                      F-3
<PAGE>

                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------



                              STATEMENTS OF INCOME
                              --------------------
                        (In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
                                                                                         YEARS ENDED DECEMBER 31,
                                                                               ---------------------------------------------

                                                                                       1998                    1997
                                                                               ---------------------   ---------------------

<S>                                                                            <C>                     <C>    
Income:
Rental income from real estate leases accounted
     for under the operating method                                            $                 104    $                129
Interest on short-term investments                                                                47                      26
Interest income on real estate leases accounted
     for under the financing method                                                                2                      15
Other income                                                                                      19                      29
Gain on sale of building                                                                         967                       -
                                                                               ---------------------   ---------------------
         Total income                                                                          1,139                     199
                                                                               ---------------------   ---------------------

Expenses:
Operating                                                                                         24                      44
Depreciation                                                                                       -                      48
Management fees                                                                                    1                       3
General and administrative                                                                        63                      77
                                                                               ---------------------   ---------------------
         Total expenses                                                                           88                     172
                                                                               ---------------------   ---------------------
Net income                                                                     $               1,051    $                 27
                                                                               =====================   =====================
Net income allocated to general partners                                       $                  16    $                  2
                                                                               =====================   =====================
Net income allocated to limited partners                                       $               1,035    $                 25
                                                                               =====================   =====================
Net income per Unit of Limited Partnership Interest                            $               41.22    $               1.00
                                                                               =====================   =====================
Distributions per Unit of Limited Partnership Interest                         $               82.08    $                  -
                                                                               =====================   =====================

</TABLE>



                       See notes to financial statements.


                                      F-4
<PAGE>

                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------



                         STATEMENTS OF PARTNERS' CAPITAL
                         -------------------------------
                     YEARS ENDED DECEMBER 31, 1998 AND 1997
                     --------------------------------------
                        (In Thousands, Except Unit Data)
<TABLE>
<CAPTION>
                                                  Units of
                                                   Limited             General              Limited               Total
                                                 Partnership          Partners'            Partners'            Partners'
                                                  Interest             Deficit              Capital              Capital
                                              ------------------ -------------------  -------------------  --------------------
                                              

<S>                                           <C>                <C>                  <C>                  <C>                
Balance - January 1, 1997                          25,109        $     (281)          $    2,243           $     1,962

   Net income                                                             2                   25                    27
                                              ------------------ -------------------  -------------------  --------------------

Balance - December 31, 1997                        25,109              (279)               2,268                 1,989

   Net income                                                            16                1,035                 1,051

   Distributions                                                          -               (2,061)               (2,061)
                                              ------------------ -------------------  -------------------  --------------------
Balance - December 31, 1998                        25,109        $     (263)          $    1,242           $       979
                                              ================== ===================  ===================  ====================
                               
</TABLE>






                       See notes to financial statements.


                                      F-5
<PAGE>


                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------



                            STATEMENTS OF CASH FLOWS
                            ------------------------
                                 (In Thousands)
<TABLE>
<CAPTION>
                                                                                        YEARS ENDED DECEMBER 31,
                                                                              ---------------------------------------------
                                                                                       1998                     1997
                                                                              ---------------------    --------------------

<S>                                                                           <C>                      <C>                
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                    $              1,051     $                27
Adjustments to reconcile net income to net cash provided
  by operating activities:
     Depreciation                                                                                -                      48
     Gain on sale of building                                                                 (967)                      -

Changes in assets and liabilities:
     Decrease (increase) in other assets                                                        16                     (19)
     (Decrease) increase in accounts payable
       and accrued expenses                                                                    (40)                      5
                                                                              ---------------------    --------------------
     Net cash provided by operating activities                                                  60                      61
                                                                              ---------------------    --------------------

CASH FLOWS FROM INVESTING ACTIVITIES:

     Minimum lease payments received, net of interest
        income earned, on leases accounted for under
        the financing method                                                                     3                      38
     Net proceeds from sale of property                                                      1,910                       -
                                                                              ---------------------    --------------------
     Cash provided by investing activities                                                   1,913                      38
                                                                              ---------------------    --------------------

CASH FLOWS FROM FINANCING ACTIVITIES:

     Cash distributions                                                                     (1,910)                      -
                                                                              ---------------------    --------------------
     Cash used in financing activities                                                      (1,910)                      -
                                                                              ---------------------    --------------------

Net increase in cash and cash equivalents                                                       63                      99

Cash and Cash Equivalents, Beginning of Year                                                   518                     419
                                                                              ---------------------    --------------------
Cash and Cash Equivalents, End of Year                                        $                581     $               518
                                                                              =====================    ====================

Supplemental Disclosure of Non-Cash Investing Activities:
---------------------------------------------------------
Change in lease classification - see Note 2

Supplemental Disclosure of Non-Cash Financing Activities:
---------------------------------------------------------

Distributions accrued to partners                                             $                151     $                 -
                                                                              =====================    ====================

</TABLE>




                       See notes to financial statements.


                                      F-6
<PAGE>


                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                     YEARS ENDED DECEMBER 31, 1998 and 1997
                     --------------------------------------

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
     -----------------------------------------------------------

     Organization
     ------------

     Winthrop Partners 81 Limited Partnership (the "Partnership") was organized
     under the Uniform Limited Partnership Act of the Commonwealth of
     Massachusetts on November 30, 1978 for the purpose of owning and leasing
     commercial and industrial real properties. The Partnership's remaining
     property is located in Dublin, a suburb of Columbus, Ohio and is leased to
     a single tenant.

     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 amounts reported in the financial statements
     and accompanying notes. Actual results could differ from those estimates.

     Leases
     ------

     The Partnership leases its real properties and accounts for such leases in
     accordance with the provisions of Statement of Financial Accounting
     Standards No. 13, "Accounting for Leases", as amended. This statement sets
     forth specific criteria for determining whether a lease should be accounted
     for as a financing lease or an operating lease.

     (a) Financing Method
         ----------------

         Under this method, minimum lease payments to be received plus the
         estimated value of the property at the end of the lease are considered
         to be the Partnership's gross investment in the lease. Unearned income,
         representing the difference between gross investment and actual cost of
         the leased property, is amortized over the lease term using the
         interest rate implicit in the lease to provide a level rate of return
         over the lease term.

     (b) Operating Method
         ----------------
         Under this method, revenue is recognized as rentals become due, which
         does not materially differ from the straight-line method. Expenses
         (including depreciation) are charged to operations as incurred.

     Percentage Rent
     ---------------

     The Partnership's remaining lease provides for a minimum annual rent plus
     additional rent based on percentages of sales at the property ("percentage
     rent"). The percentage rent is recorded on a cash basis. For the year ended
     December 31, 1998 and 1997 the partnership did not receive percentage
     rents.


                                      F-7
<PAGE>




                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                     YEARS ENDED DECEMBER 31, 1998 and 1997
                     --------------------------------------
                                   (Continued)
                                   -----------

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
     -----------------------------------------------------------------------

     Real Estate
     -----------

     Real estate is carried at cost, less accumulated depreciation. The
     Partnership records impairment losses for long-lived assets used in
     operations when indicators of impairment are present and the undiscounted
     cash flows are not sufficient to recover the asset's carrying amount. The
     impairment loss is measured by comparing the fair value of the asset to its
     carrying amount.

     Depreciation
     ------------

     Component depreciation on real estate leased to others, accounted for under
     the operating method, is computed using the straight-line method over the
     estimated useful life of each class of asset, which ranges from 5 to 35
     years. The cost of the properties represents the purchase price of the
     properties plus acquisition and closing costs, or, to the extent that the
     property had been accounted for under the financing method, the depreciable
     base is the residual value at the date of implementation of operating lease
     accounting.

     Cash and Cash Equivalents
     -------------------------

     The Partnership considers all highly liquid investments with an original
     maturity of three months or less at the time of purchase to be cash
     equivalents.

     Fair Value of Financial Instruments
     -----------------------------------

     The carrying amount of cash and cash equivalents approximates its fair
     value due to the short term nature of such instruments.

     Distributions to Partners
     -------------------------

     The Partnership distributed the net sale proceeds of $1,910,000 ($76.07 per
     Unit) during August 1998 and has made no other distributions during 1997 or
     1998. At December 31, 1998, the Partnership recorded an accrued
     distribution payable of $151,000.

     Net Income Per Limited Partnership Unit
     ---------------------------------------

     The net income per limited partnership unit is computed by dividing net
     income allocated to the limited partners by the 25,109 units outstanding.


                                      F-8
<PAGE>


                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                     YEARS ENDED DECEMBER 31, 1998 and 1997
                     --------------------------------------
                                   (Continued)
                                   -----------

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
     -----------------------------------------------------------------------
     
     Income Taxes
     ------------

     Taxable income or loss of the Partnership is reported in the income tax
     returns of its partners. Accordingly, no provision for income taxes is made
     in the financial statements of the Partnership.

     Concentration of Credit Risk
     ----------------------------

     Principally all of the Partnership's cash and cash equivalents consist of a
     mutual fund that invests in U.S. treasury bills and repurchase agreements
     with original maturity dates of three months or less.

     Segment Reporting
     -----------------

     In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
     "Disclosures about Segments of an Enterprise and Related Information,"
     which is effective for years beginning after December 15, 1997. SFAS 131
     established standards for the way that public business enterprises report
     information about operating segments in annual financial statements and
     requires that those enterprises report selected information about operating
     segments in interim financial reports. It also establishes standards for
     related disclosures about products and services, geographic areas, and
     major customers. The Partnership has one reportable segment, net leased
     commercial real estate. The Partnership evaluates performances based on net
     operating income, which is income before depreciation, amortization,
     interest and non-operating items.

2.   SIGNIFICANT TENANT
     ------------------

     The sole tenant at the Partnership's remaining property exercised an option
     to extend the term of its lease for five years, at an increase in rent of
     8%. In accordance with Statement of Financial Accounting Standards No. 13,
     the lease was reclassified as an operating lease from a direct financing
     lease on renewal. The Partnership is currently marketing this property for
     sale and has therefore classified the property as held for sale and as a
     result no depreciation is being recorded.

     The following is a summary of the minimum anticipated future rental
     receipts, excluding percentage rents, by year, under the noncancelable
     portion of the operating lease of the remaining property:

     1999................................................$          107,000
     2000................................................           107,000
     2001................................................           107,000
     2002................................................           107,000
     2003................................................             9,000
                                                         ------------------

     Total...............................................$          437,000
                                                         ==================


                                      F-9
<PAGE>


                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                     YEARS ENDED DECEMBER 31, 1998 and 1997
                     --------------------------------------
                                   (Continued)
                                   -----------

3.   TRANSACTIONS WITH RELATED PARTIES
     ---------------------------------

     One Winthrop Properties, Inc. ("One Winthrop") and Linnaeus-Hampshire
     Realty Limited Partnership are the general partners of the Partnership.
     Winthrop Management LLC, an affiliate of One Winthrop, is entitled to
     annual property management fees equal to 1.5% of the excess of cash
     receipts over cash expenditures (excluding debt service, property
     management fees and capital expenditures) from each property managed by it.
     For the years ended December 31, 1998 and 1997, Winthrop Management earned
     $1,000 and $3,000, respectively, for managing the real properties of the
     Partnership.

     As provided in the partnership agreement, the general partners are entitled
     to 8% of Cash Available for Distribution (as defined in the partnership
     agreement), subordinated to a cumulative priority quarterly distribution to
     the limited partners. The general partners may also be entitled to a
     percentage of sale or refinancing proceeds, which are subordinated to
     certain priority distributions to the limited partners. There were no
     amounts due to the general partners for the years ended December 31, 1998
     and 1997. Profits or losses not arising from a sale or refinancing are
     allocated 8% to the general partners and 92% to the limited partners.
     Profits from sales of properties are allocated between the general and
     limited partners in proportion to the amount of sales proceeds distributed,
     provided that the general partners are allocated at least 1% of the
     profits. Profits and losses arising from sales of properties where there
     are no sales proceeds are allocated 1% to the general partners and 99% to
     the limited partners.

     During the liquidation stage of the Partnership, the general partners and
     their affiliates are entitled to receive certain fees and distributions,
     subordinated to specified minimum returns to the limited partners, as
     described in the partnership agreement.

4.   REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE OPERATING METHOD
     ---------------------------------------------------------------------

     Real estate leased to others, at cost, accounted for under the operating
     method is summarized as follows:

                                                  December 31,
                                                  ------------
                                        1998                       1997
                                        ----                       ----

     Land                        $          409,000        $          601,000
     Commercial buildings                   145,000                 1,658,000
     Accumulated depreciation                     -                  (906,000)
                                 ------------------        ------------------
                                 $          554,000        $        1,353,000
                                 ==================        ==================

     Real estate at December 31, 1998 is being held for sale.




                                      F-10
<PAGE>


                    WINTHROP PARTNERS 81 LIMITED PARTNERSHIP
                    ----------------------------------------

                          NOTES TO FINANCIAL STATEMENTS
                          -----------------------------
                     YEARS ENDED DECEMBER 31, 1998 and 1997
                     --------------------------------------
                                   (Continued)
                                   -----------

5.   REAL ESTATE LEASED TO OTHERS ACCOUNTED FOR UNDER THE FINANCING METHOD
     ---------------------------------------------------------------------

     Real estate leased to others, accounted for under the financing method is
     summarized as follows:

                                                        December 31,
                                               1998                  1997

     Minimum lease payments receivable  $              -     $          295,000
     Unguaranteed residual value                       -                145,000
                                        ------------------   ------------------
                                                       -                440,000
     Less:  Unearned income                            -               (293,000)
                                        ------------------   ------------------
                                        $              -     $          147,000
                                        ==================   ==================

6.   SALE OF PROPERTY
     ----------------

              On May 21, 1998, the Partnership sold its Columbus, Ohio property
     (formerly leased to GTE North Incorporated) for $1,910,000 (net of closing
     costs of $93,000), resulting in a gain of $967,000.

7.   TAXABLE INCOME
     --------------

     The Partnership's taxable income for 1998 and 1997, differs from net income
for financial reporting purposes as follows:
<TABLE>
<CAPTION>
                                                                                            1998                      1997
                                                                                            ----                      ----

     <S>                                                                                    <C>                       <C>      
     Net income for financial reporting purposes                                     $        1,051,000         $         27,000
              Plus:        Minimum lease payments received, net of interest
                           income earned, on leases accounted for under the
                           financing method                                                       3,000                   38,000
                           Gain on sale of property                                             750,000                        -
              Minus:       Tax depreciation adjustment                                                -                  (54,000)
                                                                                     ------------------         ------------------


     Taxable income                                                                  $        1,804,000         $         11,000
                                                                                     ==================         =================

     Taxable income per Unit of Limited Partnership Interest                         $            70.91         $            .40
                                                                                     ==================         =================

</TABLE>


                                      F-11
<PAGE>

Item 8.  Changes in and Disagreements on Accounting and
-------  ----------------------------------------------
         Financial Disclosure.
         ---------------------

        There were no disagreements with Imowitz Koenig & Co., LLP regarding the
1998 or 1997 audits of the Partnership's financial statements.


                                       20
<PAGE>


                                    PART III
                                    --------

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

The Partnership has no officers or directors. The Managing General Partner
manages and controls substantially all of the Partnership's affairs and has
general responsibility and ultimate authority in all matters effecting its
business. As of February 1, 1999, the names of the directors and executive
officers of the Managing General Partner and the position held by each of them,
are as follows:

                                                      Has Served as
                            Position Held with the     a Director or
Name                       Managing General Partner   Officer Since
----                       ------------------------   -------------

Michael L. Ashner          Chief Executive Officer         1-96
                           and Director

Thomas C. Staples          Chief Financial Officer         1-99

Peter Braverman            Executive Vice President        1-96
                           and Director

Carolyn Tiffany            Chief Operating Officer         10-95
                           and Clerk

         Michael L. Ashner, age 46, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") and the Managing
General Partner since January 15, 1996. From June 1994 until January 1996, Mr.
Ashner was a Director, President and Co-chairman of National Property Investors,
Inc., a real estate investment company ("NPI"). Mr. Ashner was also a Director
and executive officer of NPI Property Management Corporation ("NPI Management")
from April 1984 until January 1996. In addition, since 1981 Mr. Ashner has been
President of Exeter Capital Corporation, a firm which has organized and
administered real estate limited partnerships.

         Thomas C. Staples, age 43, has been the Chief Financial Officer of WFA
since January 1, 1999. From March 1996 through December 1998, Mr. Staples was
Vice President/Corporate Controller of WFA. From May 1994 through February 1996,
Mr. Staples was the Controller of the Residential Division of Winthrop
Management.

         Peter Braverman, age 47, has been a Vice President of WFA and the
Managing General Partner since January 1996. From June 1995 until January 1996,
Mr. Braverman was a Vice President of NPI and NPI Management. From June 1991
until March 1994, Mr. 


                                       21
<PAGE>


Braverman was President of the Braverman Group, a firm specializing in
management consulting for the real estate and construction industries. From 1988
to 1991, Mr. Braverman was a Vice President and Assistant Secretary of Fischbach
Corporation, a publicly traded, international real estate and construction firm.

         Carolyn Tiffany, age 32, has been employed with WFA since January 1993.
From 1993 to September 1995, Ms. Tiffany was a Senior Analyst and Associate in
WFA's accounting and asset management departments. Ms. Tiffany was a Vice
President in the asset management and investor relations departments of WFA from
October 1995 to December 1997, at which time she became the Chief Operating
Officer of WFA.

         One or more of the above persons are also directors or officers of a
general partner (or general partner of a general partner) of the following
limited partnerships which either have a class of securities registered pursuant
to Section 12(g) of the Securities and Exchange Act of 1934, or are subject to
the reporting requirements of Section 15(d) of such Act: Winthrop Partners 79
Limited Partnership; Winthrop Partners 80 Limited Partnership; Winthrop
Residential Associates I, A Limited Partnership; Winthrop Residential Associates
II, A Limited Partnership; Winthrop Residential Associates III, A Limited
Partnership; 1626 New York Associates Limited Partnership; 1999 Broadway
Associates Limited Partnership; Nantucket Island Associates Limited Partnership;
One Financial Place Limited Partnership; Presidential Associates I Limited
Partnership; Riverside Park Associates Limited Partnership; Springhill Lake
Investors Limited Partnership; Twelve AMH Associates Limited Partnership;
Winthrop California Investors Limited Partnership; Winthrop Growth Investors I
Limited Partnership; Winthrop Interim Partners I, A Limited Partnership;
Southeastern Income Properties Limited Partnership; and Southeastern Income
Properties II Limited Partnership.

         Except as indicated above, neither the Partnership nor the Managing
General Partner has any significant employees within the meaning of Item 401(b)
of Regulation S-B. There are no family relationships among the officers and
directors of the Managing General Partner.

         Based solely upon a review of Forms 3 and 4 and amendments thereto
furnished to the Partnership under Rule 16a-3(e) during the Partnership's most
recent fiscal year and Forms 5 and amendments thereto furnished to the
Partnership with respect to its most recent fiscal year, the Partnership is not
aware of any director, officer or beneficial owner of more than ten percent of
the units of limited partnership interest in the Partnership that failed to file
on a timely basis, as disclosed in the above


                                       22
<PAGE>


Forms, reports required by section 16(a) of the Exchange Act during the most
recent fiscal year or prior fiscal years.

Item 10. Executive Compensation.
-------- -----------------------

         Registrant is not required to and did not pay any compensation to the
officers or directors of the Managing General Partner. The Managing General
Partner does not presently pay any compensation to any of its officers or
directors. (See Item 12, "Certain Relationships and Related Transactions.")

Item 11. Security Ownership of Certain Beneficial Owners and
-------- ---------------------------------------------------
         Management.
         -----------

         (a) Security ownership of certain beneficial owners. No person or group
is known by the Partnership to be the beneficial owner of more than 5% of the
outstanding Units at February 1, 1998. Under the Amended and Restated Agreement
of (the "Partnership Agreement"), the voting rights of the Limited Partners are
limited and, in some circumstances, are subject to the prior receipt of certain
opinions of counsel or judicial decisions.

         Under the Partnership Agreement, the right to manage the business of
the Partnership is vested in the General Partners and is generally to be
exercised only by the Managing General Partner, One Winthrop Properties, Inc.,
although the consent of the Associate General Partner, Linnaeus-Hampshire Realty
Limited Partnership, is required for all purchases, financings, refinancings and
sales or other dispositions of the Partnership's real properties and with
respect to certain other matters.

         (b) Security ownership of management. None of the partners of WFA nor
any of the officers, directors or the general partner of the General Partners
owned any Units at February 1, 1999. A wholly-owned subsidiary of WFA owns 200
Units (less than 1% of the total number of Units outstanding).

         (c) Changes in control. There exists no arrangement known to the
Partnership the operation of which may at a subsequent date result in a change
in control of the Partnership.

Item 12.  Certain Relationships and Related Transactions.
--------  -----------------------------------------------

         Under the Partnership Agreement, the General Partners and their
affiliates are entitled to receive various fees, commissions, cash
distributions, allocations of taxable income or loss and expense reimbursements
from the Partnership.

         Winthrop Management LLC is entitled to annual property management fees
equal to 1.5% of the excess of cash receipts over


                                       23
<PAGE>


cash expenditures (excluding debt service, property management fees and capital
expenditures) from each property managed by it. For the years ended December 31,
1998 and 1997, Winthrop Management earned approximately $1,000 and $3,000,
respectively, for managing the real properties of the Partnership.

         The General Partners are entitled to 8% of Cash Available for
Distribution, subordinated to a cumulative priority quarterly distribution to
the Limited Partners as provided for in the Partnership Agreement. The General
Partners are also entitled to 8% of Sale or Refinancing Proceeds, subordinated
to certain priority distributions to the Limited Partners as provided for in the
Partnership Agreement.

         During the liquidation stage of the Partnership, the General Partners
and their affiliates are entitled to receive certain fees and distributions,
subordinated to specified minimum returns to the Limited Partners as described
in the Partnership Agreement.

Item 13.  Exhibits and Reports on Form 8-K.
--------  ---------------------------------

 (a)     Exhibits:

                  The Exhibits listed on the accompanying Index to Exhibits are
                  filed as part of this Annual Report and incorporated in this
                  Annual Report as set forth in said Index.

(b)  Reports on Form 8-K - None


                                       24
<PAGE>


                                   SIGNATURES
                                   ----------

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

                              WINTHROP PARTNERS 81 LIMITED PARTNERSHIP

                                  By:      ONE WINTHROP PROPERTIES, INC.,

                                           Managing General Partner

                                           By: /s/ Michael Ashner
                                               ------------------
                                                   Michael Ashner
                                                   Chief Executive Officer

                                                Date:  March 28, 1999

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

Signature/Name            Title                    Date
--------------            -----                    ----

/s/ Michael Ashner        Chief Executive          March 28, 1999
------------------
Michael Ashner            Officer and Director

/s/ Thomas Staples        Chief Financial Officer  March 28, 1999
------------------
Thomas Staples


                                       25
<PAGE>


                                Index to Exhibits
                                -----------------

  Exhibit                                                    Page
  -------                                                    ----

   3     Amended and Restated Agreement of Limited           (a)
         Partnership of Winthrop Partners 81 (the
         "Partnership") dated as of June 2, 1981

   4     See Exhibit (3).

  10(a)  Property Management Agreement between the           (b)
         Partnership and WP Management Co., Inc.
         dated June 2, 1981

  10(b)  Documents relating to the Frank's Nursing &         (c)
         Crafts, Inc. property in Dublin, Ohio

  16.    Letter from Arthur Andersen LLP dated September     (d)
         19, 1996.

  27.    Financial Data Schedule                              27

  99.    Supplementary Information required pursuant to       31
         Section 9.4 of the Partnership Agreement

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

(a) Filed as an exhibit to the Partnership's Annual Report on Form 10-K for the
year ended December 31, 1994, and incorporated herein by reference.

(b) Filed as an exhibit to the Partnership's Registration Statement on Form
S-11, File No. 2-71045, and incorporated herein by reference.

(c) Filed as an exhibit to the Partnership's Current Report on Form 8-K dated
January 26, 1983, and incorporated herein by reference.

(d) Incorporated by reference to the Partnership's Current Report on Form 8-K
dated September 23, 1996.


                                       26