<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, 1997                             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 $199,000.

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. On February 26, 1981, the
Partnership filed a Registration Statement on Form S-11 with the Securities and
Exchange Commission (the "Commission") with respect to a public offering of
70,000 Units of limited partnership interest ("Units") at a purchase price of
$500 per Unit (an aggregate of $35,000,000). The Registration Statement was
declared effective on June 2, 1981. The offering terminated in June 1982, at
which time 25,099 Units, representing capital contributions from Limited
Partners of $12,549,500, had been subscribed for.

         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. See "Change in Control."

         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, 1997 net of accounts payable, accrued expenses and distributions
payable to Partners is approximately $481,000 which is invested in money market
instruments. Eight properties have been sold: one in 1989; one in 1991; three in
1992; two in 1993; and one in 1995. In addition, the Partnership recently
entered into a contract to sell the property formerly occupied by GTE North
Incorporated ("GTE"). (See "Property Matters.") The Partnership's future cash
distributions will include ongoing distributions from rental income and one-time
distributions of sale proceeds at such time or times as the Partnership's
remaining properties are sold. Rental income will be affected by the terms of
any new leases, any tenant improvements and leasing costs associated with

                                      2

<PAGE>
renewing leases with existing tenants or signing leases with new tenants, the
loss of rent during any period when a property is not under lease and the loss
of rent after a property is sold. See Item 2, "Description of Properties" for a
description of the Partnership's remaining properties.


Property Matters

       GTE North Incorporated - The Partnership is currently negotiating to sell
its property formerly occupied by GTE. If these negotiations are successful, it
is expected that the property will be sold, if at all, during the second or
third quarter of 1998. There can be no assurance that the property will be sold.

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.

Change in Control

       On July 18, 1995 Londonderry Acquisition II Limited Partnership
("Londonderry II"), a Delaware limited partnership, and affiliate of Apollo Real
Estate Advisors, L.P. ("Apollo"), acquired, among other things, a general
partner interest in W.L. Realty, L.P. ("W.L. Realty") and a sixty four percent
(64%) limited partnership interest in W.L. Realty, and WFA acquired the general
partner interest in the Associate General Partner.

       As a result of the foregoing acquisitions, Londonderry II is the sole
general partner of W.L. Realty which is the sole general partner of Linnaeus,
and which in turn was, until October 1997, the sole, and currently is the
managing, general partner of WFA. As a result of the foregoing, effective July
18, 1995, Londonderry II, an affiliate of Apollo, became the controlling entity
of the Managing General Partner and the Associate General Partner. In connection
with the transfer of control, the officers and directors of One Winthrop
Financial resigned and Londonderry II appointed new officers and directors. See
Item 9, "Directors, Executive Officers, Promoters and Control Persons;
Compliance With Section 16(a) of the Exchange Act.

                                      3

<PAGE>

Item 2.  Description of Properties.

         A description of the Partnership's remaining properties is as follows.
All of Registrant's remaining properties are owned in fee.

                                      Total Cost      Original
     Tenant                Date  of     of the        Portfolio      Building
Property/Location          Purchase   Property(1)   Percentage(2)  Size (sq.ft.)
-----------------          --------   -----------   -------------  -------------

GTE North Incorporated,
formerly General
 Telephone of Ohio
  Columbus, OH(3)          10/14/82     $1,849,948       16.4          99,000


Frank's Nursery
and Crafts, Inc.
  Columbus, OH(4)           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.
(3)      Property was vacated at the expiration of the lease term in April 1997
         and is currently  under  contract for sale.  See Item 1, "Description
         of Business-Property Matters."
(4)      Franks Nursery and Crafts, Inc. ("Frank's") is a public company.

         The Partnership owns the fee interest in each of the two remaining
properties and acquired all of the properties solely with Partnership capital
and without any mortgage financing. Each of these properties is commercial in
nature and, until April 1997, was leased under a triple net lease to a single
tenant. On April 30, 1997, the lease with GTE expired and the property was
vacated. (See Item 1, "Description of Business-Property Matters" for information
relating to the prospective sale of this property [Status of Property].
Accordingly, the Partnership has utilized its cash reserves to satisfy the
expenses of the property.

         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, 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 Properties 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 its tenant. Until
such time as a lease expires, the Partnership has no responsibility

                                      4

<PAGE>

for any maintenance, repairs or improvements associated with any of 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. With respect to the GTE
property, upon the expiration of its lease, the Partnership became responsible
for these costs. The Partnership believes that the Properties are 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.

         Set forth below is a table showing the gross carrying value and
accumulated depreciation and federal tax basis of each of the Partnership's
properties as of December 31, 1997:

                   Gross
                   Carrying       Accumulated                           Federal
Property           Value(1)     Depreciation(1)     Rate     Method    Tax Basis
--------           --------     ---------------     ----     ------    ---------

GTE North         $1,850,000        $906,000        15-35     S/L       $191,000
Columbus, OH

Frank's Nursery      409,000               -            -      -         409,000
 and Crafts, Inc.
Columbus, OH

------------
(1)  As accounted for under Statement of Financial Accounting Standards No. 13.


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.

                                      5

<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 March 1, 1998, there were 1,249 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, 1997 and 1996, 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
         ------------------------                ----------------------

                                                   1997          1996
                                                   ----          ----

         March 31                                    -           3.23
         June 30                                     -            -
         September 30                                -            -
         December 31                                 -            -


                                      6

<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 business 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 business and
results of operation. 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.


Liquidity and Capital Resources

         The Partnership's two remaining properties include a vacant warehouse
and a retail store, which is leased to a single tenant pursuant to a triple net
lease. The recently extended lease with Frank's Nursery and Crafts, Inc. (the
"Frank's Lease") expires in January 2003, subject to extension. The lease with
GTE North Incorporated (the "GTE Lease") expired in April 1997 (see below). The
Partnership is currently negotiating to sell the GTE property for approximately
$2,000,000. This sale, which will be subject to the completion of the buyer's
due diligence review, is expected to close, if at all, during the second quarter
of 1998. There can be no assurance that the property will be sold, or if sold,
at the expected purchase price.

         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. The Partnership would be responsible for similar expenses if the
property were not re-let upon the expiration of such lease.


         The level of liquidity based on cash and cash equivalents experienced a
$99,000 increase at December 31, 1997 as compared to December 31, 1996. The
Partnership's $61,000 of cash provided by operating activities declined
significantly at December 31, 1997, as compared to December 31, 1996, primarily
due to the decrease in net income in 1997. At December 31, 1997, the Partnership
had approximately $518,000 in cash and cash equivalents.

                                      7

<PAGE>

         The Partnership requires cash primarily to pay management fees and
general and administrative expenses. In addition, if the Partnership is unable
to sell a 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. As a result of the
expiration of the GTE Lease in April 1997, the Partnership is responsible for
the annual operating costs of approximately $50,000 associated with this
property (which consist principally of real estate taxes). In addition, there is
some environmental clean-up required relating to previously removed underground
storage tanks at the GTE property. GTE has agreed to pay for these costs. The
Partnership's obligation for the clean-up costs, if any, is not expected to be
significant. The Partnership's rental and interest income has been sufficient to
satisfy the Partnership's obligations since the expiration of the GTE Lease.

         Due to the expiration and non-renewal of the GTE lease, the general
partner has decided to suspend cash distributions in order to maintain cash
reserves, which may be needed to fund potential capital improvements required in
connection with the re-letting of the property. The Frank's Lease was recently
extended at a small increase in rent. The Partnership invests its working
capital reserves in a money market mutual fund.

         The Partnership is dependent upon the General Partner for management
and administrative services. The General Partner has completed an assessment and
believes that its computer systems will function properly with respect to dates
in the year 2000 and thereafter (the "Year 2000 Issue"). Accordingly, it is not
expected that the Partnership will incur any material costs associated with, or
be materially affected by, the Year 2000 Issue.

Results of Operations

         Net income decreased by $196,000 for the year ended December 31, 1997,
as compared to 1996, due to a decrease in revenues of $134,000 and an increase
in expenses of $62,000.

         Revenues decreased for the year ended December 31, 1997, as compared to
1996, due to the expiration of the GTE lease in April 1997. The Partnership
received $9,500 of percentage rents in 1996. Expenses increased by $62,000 due
to costs associated with the vacant GTE building and higher general and
administrative expenses during 1997.

                                      8


<PAGE>

Item 7.  Financial Statements

                             FINANCIAL STATEMENTS

                         YEAR ENDED DECEMBER 31, 1997

                                    INDEX

                                                                            Page


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

Financial Statements:

Balance Sheets as of December 31, 1997 and 1996..........................  F-3

Statements of Income for the Years Ended
     December 31, 1997 and 1996..........................................  F-4

Statements of Partners' Capital for the Years Ended
     December 31, 1997 and 1996..........................................  F-5

Statements of Cash Flows for the Years Ended
     December 31, 1997 and 1996..........................................  F-6

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


                                     F-1

<PAGE>

                         Independent Auditors' Report


To the Partners
Winthrop Partners 81 Limited Partnership
Boston, Massachusetts


We have audited the accompanying balance sheets of Winthrop Partners 81 Limited
Partnership (a Massachusetts limited partnership) as of December 31, 1997 and
1996, 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, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended, in conformity with generally
accepted accounting principles.



                                                  /s/ Imowitz Koenig & Co., LLP
                                                  -----------------------------

New York, New York
January 28, 1998

                                     F-2

<PAGE>

                   WINTHROP PARTNERS 81 LIMITED PARTNERSHIP

                                BALANCE SHEETS
                       (In Thousands, Except Unit Data)



                                                               DECEMBER 31,
                                                            -------------------
                                                             1997         1996
                                                            ------       ------

ASSETS

Real Estate Leased to Others:

Accounted for under the operating method,
     at cost, net of accumulated depreciation of
     $906 (1997) and $858 (1996)                            $1,353       $1,401
Accounted for under the financing method                       147          185
                                                            ------       ------
                                                             1,500        1,586

Other Assets:

Cash and cash equivalents                                      518          419
Other assets                                                    21            2
                                                            ------       ------

         Total Assets                                       $2,039       $2,007
                                                            ======       ======


LIABILITIES AND PARTNERS' CAPITAL

Liabilities:

Accounts payable and accrued expenses                       $   50       $   45
                                                            ------       ------

         Total Liabilities                                      50           45
                                                            ------       ------

Partners' Capital:

Limited Partners -
   Units of Limited Partnership Interest,
   $500 stated value per Unit; authorized-70,010 Units;
   issued and outstanding - 25,109 Units                     2,268        2,243
General Partners' Deficit                                     (279)        (281)
                                                            ------       ------

         Total Partners' Capital                             1,989        1,962
                                                            ------       ------

         Total Liabilities and Partners' Capital            $2,039       $2,007
                                                            ======       ======

                      See notes to financial statements.

                                    F-3

<PAGE>

                   WINTHROP PARTNERS 81 LIMITED PARTNERSHIP

                             STATEMENTS OF INCOME
                       (In Thousands, Except Unit Data)



                                                       YEARS ENDED DECEMBER 31,
                                                       ------------------------

                                                           1997       1996
                                                          ------     ------

Income:

Rental income from real estate leases accounted
  for under the operating method                         $  129      $  302
Other income                                                 29           -
Interest on short-term investments                           26          13
Interest income on real eastate leases accounted
  for under the financing method                             15          18
                                                          ------     ------


    Total income                                             199        333
                                                          ------     ------

Expenses:

Operating                                                     44          -
Depreciation                                                  48         50
Management fees                                                3          5
General and administrative                                    77         55
                                                          ------     ------

    Total expenses                                           172        110
                                                          ------     ------

Net income                                                $   27     $  223
                                                          ======     ======

Net income allocated to general partners                  $    2     $   18
                                                          ======     ======

Net income allocated to limited partners                  $   25     $  205
                                                          ======     ======

Net income per Unit of Limited Partnership Interest       $ 1.00     $ 8.16
                                                          ======     ======

Distributions per Unit of Limited Partnership Interest    $    -     $ 3.23
                                                          ======     ======

                      See notes to financial statements.

                                       F-4

<PAGE>

                   WINTHROP PARTNERS 81 LIMITED PARTNERSHIP

                       STATEMENTS OF PARTNERS' CAPITAL
                    YEARS ENDED DECEMBER 31, 1997 AND 1996
                       (In Thousands, Except Unit Data)


                                Units of
                                Limited       General      Limited
                              Partnership    Partners'    Partners'     Total
                               Interest       Deficit      Capital     Capital
                              -----------    ---------    ---------    -------

Balance - January 1, 1996        25,109      $   (299)     $ 2,119     $ 1,820

  Distributions                                     -          (81)        (81)
  Net income                                       18          205         223
                              -----------    ---------    ---------    -------


Balance - December 31, 1996      25, 109         (281)       2,243       1,962

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

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


                      See notes to financial statements.

                                    F-5

<PAGE>
                   WINTHROP PARTNERS 81 LIMITED PARTNERSHIP

                           STATEMENTS OF CASH FLOWS
                                (In Thousands)



                                                       YEARS ENDED DECEMBER 31,
                                                       ------------------------
                                                          1997         1996
                                                         ------       ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                               $   27       $  223
Adjustments to reconcile net income to net cash
  provided by operating activities:
     Depreciation                                            48           50

Changes in assets and liabilities:
     Increase in other assets                               (19)           -
     Increase in accounts payable and accrued expenses        5           34
                                                         ------       ------

     Net cash provided by operating activities               61          307
                                                         ------       ------

CASH FLOWS FROM INVESTING ACTIVITIES:

     Minimum lease payments received, net of interest
        income earned, on leases accounted for under
        the financing method                                 38           35
                                                         ------       ------

     Cash provided by investing activities                   38           35
                                                         ------       ------

CASH FLOWS FROM FINANCING ACTIVITIES:

     Cash distributions                                       -         (157)
                                                         ------       ------


     Cash used in financing activities                        -         (157)
                                                         ------       ------

Net increase in cash and cash equivalents                    99          185

Cash and Cash Equivalents, Beginning of Year                419          234
                                                         ------       ------

Cash and Cash Equivalents, End of Year                   $  518       $  419
                                                         ======       =======


                      See notes to financial statements.

                                    F-6

<PAGE>

                        NOTES TO FINANCIAL STATEMENTS
                    YEARS ENDED DECEMBER 31, 1997 and 1996


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 owns two properties
located in Columbus, Ohio, one of which is leased to a single tenant and the
other property is a vacant warehouse.

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.

                                     F-7

<PAGE>

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, 1996, the Partnership received percentage rent totaling
approximately $9,500.

Real Estate

         Real estate is carried at cost, less accumulated depreciation. In
accordance with Statement of Financial Accounting Standards ("SFAS") No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of," 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.


                                    F-8

<PAGE>

Distributions to Partners

         Due to the expiration and non-renewal of the GTE lease, the Partnership
has decided to suspend cash distributions in order to maintain cash reserves.

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.

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.

2.   SIGNIFICANT TENANT

         On April 30, 1997, the lease for the Partnership's warehouse property
expired. The tenant had formerly vacated the premises but had continued to pay
rent through the end of the lease term. Rental revenue from this tenant
comprised approximately 58% and 78% of the Partnership rental revenue for 1997
and 1996, respectively. The Partnership's other property is currently leased to
a single tenant, whose lease expires in January 2003.

3.   TRANSACTIONS WITH RELATED PARTIES

         One Winthrop Properties, Inc. ("One Winthrop" or the "Managing General
Partner") 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, 1997 and 1996, Winthrop Management earned $3,000
and $5,000, respectively, for managing the real properties of the Partnership.

<PAGE>
         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 are also entitled to 8% 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, 1997 and 1996.


         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,
                                                  --------------
                                                1997         1996
                                                ----         ----

                 Land                        $  601,000   $  601,000
                 Commercial buildings         1,658,000    1,658,000
                 Accumulated depreciation      (906,000)    (858,000)
                                             ----------   ----------
                                             $1,353,000   $1,401,000
                                             ==========   ==========

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

                 1998.......................  $ 49,000
                 1999.......................    49,000
                 2000.......................    49,000
                 2001.......................    49,000
                 2002.......................    49,000
                 Thereafter.................     4,000
                                             ---------

                           Total............  $249,000
                                             =========

                                    F-10

<PAGE>

         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,
                                                           -------------------
                                                           1997           1996
                                                           ----           ----

     Minimum lease payments receivable                  $ 295,000      $ 57,000

     Unguaranteed residual value                          145,000       145,000
                                                        ---------      --------
                                                          440,000       202,000
     Less:  Unearned income                              (293,000)      (17,000)
                                                        ---------      --------
                                                        $ 147,000      $185,000
                                                        =========      ========

         The following is a summary of the minimum anticipated future rental
receipts, excluding percentage rents, by year, under the non-cancellable portion
of the financing lease:

              1998............................  $ 58,000
              1999............................    58,000
              2000............................    58,000
              2001............................    58,000
              2002............................    58,000
              Thereafter......................     5,000
                                                --------

                           Total..............  $295,000
                                                ========

6.   TAXABLE INCOME

         The Partnership's taxable income for 1997 and 1996, differs from net
income for financial reporting purposes as follows:

                                                              1997       1996
                                                              ----       ----

Net income for financial reporting purposes                 $ 27,000   $223,000
     Plus:      Minimum lease payments received,
                net of interest income earned,
                on leases accounted for under
                the financing method                         38,000     35,000
     Minus:     Tax depreciation adjustment                 (54,000)   (78,000)
                                                            --------   --------

Taxable income                                              $ 11,000   $180,000
                                                            ========   ========

Taxable income per Unit of Limited Partnership Interest     $    .40   $   6.60
                                                            ========   ========

                                     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 1997 or 1996 audits of the Partnership's financial statements.


                                     F-12

<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, 1998, 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

Edward Williams              Chief Financial Officer        4-96
                             Vice President and
                             Treasurer

Peter Braverman              Senior Vice President          1-96

Carolyn Tiffany              Vice President and Clerk      10-95

         Michael L. Ashner, age 46, has been the Chief Executive Officer of
Winthrop Financial Associates, A Limited Partnership ("WFA") 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.

         Edward V. Williams, age 57, has been the Chief Financial Officer of WFA
since April 1996. From June 1991 through March 1996, Mr. Williams was Controller
of NPI and NPI Management. Prior to 1991, Mr. Williams held other real estate
related positions including Treasurer of Johnstown American Companies and Senior
Manager at Price Waterhouse.

         Peter Braverman, age 46, has been a Senior Vice President of WFA 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.
Braverman was President of the

                                     F-13


<PAGE>

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 31, 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. From October 1995 to present
Ms. Tiffany has been a Vice President in the asset management and investor
relations departments 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; Southeastern Income
Properties II Limited Partnership; and Winthrop Miami Associates 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 Forms, reports required by section
16(a) of the Exchange Act during the most recent fiscal year or prior fiscal
years.

                                     F-14

<PAGE>

Item 10. Executive Compensation.


         Registrant is not required to and did not pay any compensationto 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, 1998. 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 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

                                     F-15

<PAGE>

fees and capital expenditures) from each property managed by it. For the years
ended December 31, 1997 and 1996, Winthrop Management earned approximately
$3,000 and $5,300, 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

                                     F-16

<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, 1998

         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, 1998
------------------        Officer and Director
Michael Ashner


/s/ Edward Williams       Chief Financial Officer     March 28, 1998
-------------------
Edward Williams

<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       28
         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.

                                     F-18