<PAGE>
 
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                                  FORM 10-KSB

(Mark One)

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

        For the fiscal year ended December 31, 1998

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

            For the transition period from _________ to __________


  Commission file number: 000-21470

                                N'TANDEM TRUST
                      -----------------------------------
                (Name of small business issuer in its charter)
 
           California                                    33-6109499
------------------------------              -----------------------------------
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

 
              6430 South Quebec Street, Englewood, Colorado 80111
          -----------------------------------------------------------
          (Address of principal executive offices including zip code)

 
Issuer's telephone number including area code:                     (303)741-3707

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

Securities registered under Section 12(g) of the Exchange Act:  Common Shares of
Beneficial Interest, par value $0.01 per share, and Preferred Shares of
Beneficial Interest, par value $0.01 per share.


  Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes [X]  No [_]

  Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB.  [X]

  Issuer's revenues for its most recent fiscal year:  $ 1,699,900


  At March 29, 1999, the issuer had 109,308 Common Shares of Beneficial Interest
outstanding.

                                       1

<PAGE>
 
                               TABLE OF CONTENTS
<TABLE>
<CAPTION>
 
                                    PART I
                                  -----------
<S>          <C>                                                                   <C>
 
                                                                                   Page
                                                                                     --
 
Item 1.      Description of Business                                                  3
 
Item 2.      Description of Properties                                                6
 
Item 3.      Legal Proceedings                                                        8
 
Item 4.      Submission of Matters to a Vote of Security Holders                      8

<CAPTION>  
                                    PART II
                                  -----------
<S>          <C>                                                                   <C> 
Item 5.      Market for the Trust's Common Shares and Related Shareholder Matters     9
 
Item 6.      Management's Discussion and Analysis                                     9
 
Item 7.      Financial Statements                                                    13
 
Item 8.      Changes in and Disagreements with Accountants on Accounting and
             Financial Disclosure                                                    25
<CAPTION>  
                                   PART III
                                  -----------
<S>          <C>                                                                   <C> 
Item 9.      Directors, Executive Officers, Promoters and Control Persons;
             Compliance with Section 16(a) of The Exchange Act                       25
 
Item 10.     Executive Compensation                                                  25
 
Item 11.     Security Ownership of Certain Beneficial Owners and Management          26
 
Item 12.     Certain Relationships and Related Transactions                          26
 
Item 13.     Exhibits and Reports on Form 8-K                                        26
 
             SIGNATURES                                                              28
 
</TABLE>

                                       2
<PAGE>
 
                                     PART I
                                     ------

Item 1.  DESCRIPTION OF BUSINESS AND PROPERTIES
         --------------------------------------

General
-------

Certain matters discussed under the captions "Description of Business and
Properties," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and elsewhere in this Annual Report on Form 10-KSB may
constitute forward-looking statements for purposes of Section 21E of the
Securities Exchange Act of 1934, as amended, and as such involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the N'Tandem Trust to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements.

N'Tandem Trust, an unincorporated business trust (the "Trust"), was formed in
November 1991 under the laws of the State of California.  The Trust was
organized to invest in existing, substantially developed and occupied
manufactured home communities.  The Trust was funded through a public offering
of common shares of beneficial interest, par value $0.01 per share (the "Common
Shares"), and preferred shares of beneficial interest, par value $0.01 per share
(the "Preferred Shares"), which commenced in April 1992 and terminated in April
1993.  In the offering, 98,169 Common Shares and 98,323 Preferred Shares were
sold for gross proceeds aggregating $2,454,225 and $2,458,075, respectively.  At
December 31, 1998, the Trust's portfolio was comprised of six wholly-owned and
three partially-owned manufactured home communities located in four states.

The sponsor and advisor of the Trust is The Windsor Corporation, a California
corporation (the "Advisor").  In September 1997, Chateau Communities, Inc, a
publicly-traded Maryland real estate investment trust which is one of the
largest owner/operators of manufactured home communities in the United States
("Chateau"), purchased all of the outstanding capital stock of the Advisor.
Following Chateau's purchase of the Advisor, at the request of Chateau, (i) the
Trustees of the Trust voluntarily resigned and (ii) in connection with such
resignation, appointed three new Trustees proposed by Chateau.  Such Trustees
were re-elected as the Trust's Trustees at the 1998 Annual Meeting of
Shareholders of the Trust held on October 23, 1998.

The Trust operates so as to qualify as a real estate investment trust (a "REIT")
under Sections 856 through 860 of the Internal Revenue Code of 1986, as amended
(the "Code").  As a REIT, the Trust is required to distribute at least 95% of
its real estate investment trust taxable income.

Business Development
--------------------

On October 23, 1998, at the 1998 Annual Meeting of Shareholders, the Trust's
shareholders approved, among other things, (i) the conversion of the Trust from
a finite-life entity to an infinite-life entity; and (ii) the amendment and
restatement of the Trust's Declaration of Trust (the "Amended Declaration") and
the adoption of By-laws for the Trust (collectively, the "Organizational
Amendments").  The principal purposes of the Organizational Amendments were to
convert the Trust from a finite-life to an infinite-life entity and to remove
various restrictions, limitations and other requirements contained in the
Trust's previous Declaration of Trust which are not typically found in the more
modern organizational documents of leading REITs.  The Amended Declaration also
provided for changing the name of the Trust from "Windsor Real Estate Investment
Trust 8" to "N'Tandem Trust."

                                       3

<PAGE>
 
As a result of the approval of the Organizational Amendments, the Trust now
intends to move forward with certain transactions and to effect certain changes
including the following: (i) the Trust will complete its restructuring as an
"umbrella partnership" REIT in order to facilitate tax-free and/or tax-deferred
acquisitions of additional properties, (ii) the Trust will begin implementing a
growth-oriented business plan (the "Business Plan") intended to cause the Trust
to attain greater size and asset diversity; and (iii) if successful in the
implementation of the Business Plan, the Trust anticipates that it will seek to
list the Common Shares on a national securities exchange or NASDAQ, and if
deemed appropriate, raise additional capital through an underwritten public
offering of the Common Shares or other securities of the Trust.

Additionally, Chateau has advised the Trust that it intends to announce that the
Trust will be a primary vehicle through which Chateau will make investments in
manufactured home communities that do not fit the core asset type typical of the
existing Chateau portfolio, which is characterized by large, stable,
institutional-quality, full amenitized properties.  The Trust will employ higher
levels of leverage than Chateau and will focus primarily on "lower profile
assets", meaning properties that (i) are typically not part of a portfolio of
manufactured housing community properties; (ii) are located in tertiary
demographic and geographic markets; (iii) are not managed by a nationally known
manufactured home community operator; (iv) may be smaller and are likely to have
fewer amenities; and (v) have a greater proportion of single-wide homes than the
typical Chateau community.  The Trust believes that its affiliation with Chateau
will benefit the Trust by providing it with access to Chateau's national
organization, management team and investment and management philosophies.
Through its affiliation with Chateau, the Trust believes that it will be exposed
to a wider range of acquisition opportunities as a result of Chateau's national
organization and knowledge of the manufactured housing community industry and
will benefit from Chateau's expertise in effectively and efficiently managing
properties.

The Trust believes that significant opportunities exist to acquire additional
properties that fit the investment objectives and guidelines set forth in its
Business Plan.  The Trust anticipates that it will focus on acquisitions where
the Trust believes there is substantial opportunity to improve operational and
financial results or where for some reason, because of poor management or
otherwise, a property is operating substantially below its potential.  The Trust
anticipates that the funds required to implement its Business Plan are likely to
come from (i) additional investments from Chateau or unaffiliated third parties
and (ii) traditional mortgage financing or refinancing or sales of equity and
debt securities.

In March 1998, the Trust acquired Woodland Hills, a 627-site manufactured home
community located in Montgomery, Alabama, for $5.5 million.  In order to enable
the Trust to make the acquisition, Chateau offered to make an investment in the
Trust.  The Trustees accepted such offer and, on March 30, 1998, the Trust
entered into an agreement with Chateau, pursuant to which Chateau invested $5.5
million in the Trust in exchange for the issuance within 90 days of such
investment of (i) such number of Common Shares (at a price of $25 per share) as
the Trustees may determine; and (ii) promissory notes in a principal amount of
the balance of the investment.  In connection with such investment, on May 11,
1998, the Trust issued to Chateau (i) 19,139 Common Shares; and (ii) two
promissory notes with an aggregate principal amount of $5,001,525.

In November 1998, the Trust acquired Southern Mobile Home Community, a 201-site
manufactured home community located in Lexington Park, Maryland ("Southern").
The purchase price paid for Southern was $2,350,000, of which $2,000,000 was
paid at closing and $350,000 will be paid over the next four years.  In order to
purchase Southern, N'Tandem borrowed $1,950,000 from

                                       4

<PAGE>
 
Chateau at an annual interest rate equal to 1% per annum above the prime rate
established by Bank One, N.A.


In December 1998, the Trust purchased Lexington Manufactured Home Community, a
76-site manufactured home community ("Lexington"), and Suburban Manufactured
Home Community, a 135-site manufactured home community ("Suburban").  Both
Lexington and Suburban are located in Lexington, Maryland.  The aggregate
purchase price for Lexington and Suburban was $4,250,000, of which $3,750,000
was paid at closing and $500,000 will be paid upon completion of certain
obligations relating to the management of the Lexington communities.  In order
to purchase Lexington and Suburban, N'Tandem borrowed $3,700,000 from Chateau at
an annual interest rate equal to 1% per annum above the prime rate established
by Bank One, N.A.

At the end of the third quarter of 1998, the Trust negotiated to acquire one
manufactured home community and ownership interests in six other manufactured
home communities from Windsor Park Properties 4, a California limited
partnership ("Windsor").  The consummation of the proposed acquisition is
subject to the satisfaction of certain conditions, including the approval of
Windsor's limited partners.  The purchase price for these assets will be paid by
the Trust in cash.  Substantially all of the funds required by the Trust to
complete the proposed acquisition of these assets will be supplied by Chateau,
in exchange for the issuance by the Trust of an unsecured promissory note.
Pursuant to the terms of proposed acquisition, this promissory note will be in a
principal amount of $9,000,000 and will bear interest at an annual rate equal to
1% per annum above the prime rate established by Bank One, N.A. The Trust and
Chateau have discussed the possibility of converting all or a portion of the
principal amount of this promissory note into Common Shares or Preferred Shares;
however, there is no agreement or understanding between the Trust and Chateau
relating to any such conversion.

In addition, the Trust will seek to engage in consolidation and acquisition
transactions with other owners of manufactured home communities, which meet the
Trust's property and acquisition criteria, using its equity securities or
limited partner units of N'Tandem Properties, L.P., a newly-formed Delaware
limited partnership subsidiary of the Trust (the "Operating Partnership"), to
facilitate such transactions. At December 31, 1998, the Operating Partnership
had issued no limited partnership units and did not own any assets.



Business of Issuer
------------------

The Trust is in the business of acquiring, managing, and holding for investment
manufactured home communities.  Competitors of the Trust include public and
private REITs, corporations, limited partnerships, individuals, and other
entities engaged in real estate investment activities.  Competition for such
properties varies with (i) changes in the supply or demand for similar or
competing properties in a given area, (ii) changes in interest rates and the
availability of mortgage funds, (iii) and changes in tax, real estate,
environmental, and zoning laws.

The Trust's profitability depends in part on maximizing occupancy and rental
rates at its manufactured home communities.  Rents and occupancy rates are
affected by both changes in general economic conditions and changes in local
conditions, such as levels of employment, supply of other comparable units or
competitive housing alternatives, zoning laws, and the availability and cost of
energy and transportation.

All of the Trust's properties are located in or near large urban areas.
Accordingly, they compete for rentals not only with other manufactured home
communities but with apartments and other forms of low-cost housing that might
exist.



                                       5

<PAGE>
 
The Trust's profitability also depends on the minimization of both property and
Trust administration expenses.  Expenses are affected by changes in general
economic trends and changes in local conditions, such as prevailing wages,
utility rates, insurance costs, and real estate taxation practices.

The Trust has no employees.  The administrative services for the Trust are
provided by the Advisor, which is reimbursed for costs incurred on behalf of the
Trust.  The Trust's manufactured home communities are managed by Chateau, which
employs all of the on-site personnel for such communities and is reimbursed by
the Trust for all such costs.


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


At December 31, 1998 the Trust owned interests in the following manufactured
home communities:

<TABLE>
<CAPTION>
                     Ownership
Name of Property    Percentage   Date Acquired          Location
------------------  -----------  -------------  ------------------------
<S>                 <C>          <C>            <C>
 
West Star                  100%  January 1993   Tucson, Arizona
El Frontier                100%  February 1994  Tucson, Arizona
Woodland Hills             100%  March 1998     Montgomery, Alabama
Southern                   100%  November 1998  Lexington, Maryland
Surburban                  100%  December 1998  Lexington, Maryland
Lexington                  100%  December 1998  Lexington, Maryland
Long Lake                   40%  June 1995      West Palm Beach, Florida
Denali Park                 11%  February 1997  Phoenix, Arizona
Apache East                 11%  February 1997  Phoenix, Arizona
</TABLE>
The overall occupancy of the nine communities owned by the Trust at December 31,
1998 was approximately 84.9%. The Advisor continues to maintain the properties
in good condition and promote them to improve occupancy.

The Trust operates the properties as manufactured home communities, renting
homesites to manufactured home tenants on a month-to-month basis.  The
properties compete for rentals with other manufactured home communities and
apartments in their local markets. It is the Advisor's opinion that the
properties are in good condition and are adequately insured.

                                       6

<PAGE>
 
The following tables set forth certain information as of December 31, 1998
relating to the Trust's properties.
<TABLE>
<CAPTION>
 
                                                                                                                      
                                                                                                                       
                                                        West Star                    El Frontier             Long Lake          
                                                 ----------------------       -----------------------  --------------------    
                                                         Tucson,                       Tucson,            West Palm Beach,      
Location                                                 Arizona                       Arizona                Florida           
---------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                          <C>                      <C>
 
Percentage of Ownership                                    100%                          100%                   40%
Date Acquired                                             1/93                          2/94                  6/95
Acreage                                                     13                            19                    19
Number of Homesites                                         89                           179                   134
Monthly Rents (1)                                   $      232                    $      238            $      356
Occupancy                                                  100%                           99%                   83%
Real Estate Taxes                                   $    7,000                    $   17,600            $   39,500
Federal Tax Basis (2)                               $1,136,000                    $2,833,700            $1,227,385
Mortgage Information:
  Balance payable                                   $2,050,000                            (3)           $1,600,000
  Interest rate                                           8.23%                           (3)                 8.23%
  Amortization period                                       --                            (3)                   --
  Maturity date                                           6/02                            (3)                 6/02
  Balance due at maturity                           $2,050,000                            (3)           $1,600,000
</TABLE>




<TABLE>
<CAPTION>
 
                                                                                                                       
                                                       Apache East                  Denali Park           Woodland Hills        
                                                 ----------------------       ---------------------  -----------------------   
                                                        Phoenix,                    Phoenix,               Montgomery,         
Location                                                 Arizona                      Arizona                 Alabama           
----------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                          <C>                    <C>
 
Percentage of Ownership                                     11%                         11%                     100%
Date Acquired                                             2/97                        2/97                     3/98
Acreage                                                     16                          33                      124
Number of Homesites                                        123                         162                      627
Monthly Rents (1)                                   $      220                    $    202                     $145
Occupancy                                                   93%                         91%                      82%
Real Estate Taxes                                   $   21,000                    $ 24,100                  $48,200
Federal Tax Basis (2)                               $  239,123                    $303,405               $5,802,200
Mortgage Information:
  Balance payable                                   $3,009,400                          (4)                      (6)
  Interest rate                                           8.38%                         (4)                      (6)
  Amortization period                                 24 years                          (4)                      (6)
  Maturity date                                           3/06                          (4)                      (6)
  Balance due at maturity                           $2,583,200                          (4)                      (6)
</TABLE>

                                       7

<PAGE>
 
<TABLE>
<CAPTION>
 
                                                                                                                       
                                                       Southern                    Suburban                Lexington          
                                                ----------------------       ---------------------  -----------------------   
                                                      Lexington,                  Lexington,              Lexington,          
Location                                               Maryland                    Maryland                Maryland           
---------------------------------------------------------------------------------------------------------------------------
<S>                                      <C>                          <C>                    <C>
 
Percentage of Ownership                                100% (5)                    100% (5)                 100% (5)
Date Acquired                                            11/98                       12/98                    12/98
Acreage                                                     36                          49                       30
Number of Homesites                                        201                         135                       76
Monthly Rents (1)                                     $    220                    $    202                   $  293
Occupancy                                                   68%                         84%                      83%
Real Estate Taxes                                     $ 34,100                    $ 16,900                   $9,500
Federal Tax Basis (2)                               $2,453,400                  $2,494,200               $1,404,800
Mortgage Information:                                       (7)                         (7)                      (7)
  Balance payable                                           (7)                         (7)                      (7)
  Interest rate                                             (7)                         (7)                      (7)
  Amortization period                                       (7)                         (7)                      (7)
  Maturity date                                             (7)                         (7)                      (7)
  Balance due at maturity                                   (7)                         (7)                      (7)
</TABLE>
                                        

(1)  Average rental rates in effect on December 31, 1998.
(2)  For income tax purposes, the property and its components are depreciated
     using both straight-line and accelerated methods over useful lives ranging
     from five to 40 years.
(3)  Same mortgage note payable as West Star.
(4)  Same mortgage note payable as Apache East.
(5)  The Trust indirectly owns this property through N'Tandem at Lexington, LLC,
     a Maryland limited liability company, which is wholly-owned by the
     Operating Partnership.
(6)  The Trust entered into two notes, one secured and one unsecured from
     Chateau, for an aggregate of $5,001,000  with an interest rate of Prime
     plus one percent (8.75% at December 31, 1998), with a maturity date of
     April 1999.
(7)  The Trust entered into a note from Chateau for an aggregate of $5,650,000
     with an interest rate of Prime plus one percent (8.75% at December 31,
     1998), with a maturity date of November 1999.


Item 3.  LEGAL PROCEEDINGS
         -----------------

There are no pending legal proceedings, other than ordinary routine litigation
incidental to the business, to which the Trust is a party or to which any of its
properties is the subject.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
         ---------------------------------------------------

On October 23, 1998, the Trust held its 1998 Annual Meeting of Shareholders.  At
the 1998 Annual Meeting, the Trust's shareholders voted on (i) the conversion of
the Trust from a finite-life entity to an infinite-life entity; (ii) the
amendment and restatement of the Trust's Declaration of Trust and the adoption
of By-laws for the Trust; (iii) the approval of a stock option plan for the
Trust, through the approval and adoption of the proposed form of the 1998 Equity
Compensation Plan; and (iv) the annual election of Trustees to serve on the
Trust's Board of Trustees.  Information regarding the number of votes cast for,
against or withheld, as well as the number of abstentions, on each of the
proposals presented at the 1998 Annual Meeting of Shareholders appears in Item 4
of the Trust's Form 10-QSB for the quarter ended September 30, 1998.

                                       8

<PAGE>
 
                                 PART II
                                 -------

Item 5.  MARKET FOR THE TRUST'S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
         --------------------------------------------------------------------

As of December 31, 1998, there was no public market for the Trust's Common
Shares of record. As of December 31, 1998, there were 181 shareholders holding
an aggregate of 109,308 common shares.

Cash distributions paid to holders of Common Shares since December 31, 1996 are
as follows:

<TABLE>
<CAPTION>
                                           Aggregate
Date Paid                                    Amount                           Per Share
---------                                  ---------                          --------- 
<S>                                         <C>                             <C>
November 1998                                $41,000                             $0.375
August 1998                                  $37,700                             $0.375
May 1998                                     $33,800                             $0.375
February 1998                                $33,700                             $0.375
November 1997                                $33,800                             $0.375
August 1997                                  $33,800                             $0.375
May 1997                                     $33,800                             $0.375
February 1997                                $33,800                             $0.375
</TABLE>

Common Shares and Preferred Shares receive distributions of cash from operations
when and as declared by the Trustees.  The Trustees are required to declare a
Preferred Share dividend on the Preferred Shares annually, equal to between 6%
and 7% of the per share original offering price of the Preferred Shares, as
adjusted for prior distributions.  Once the annual Preferred Share Dividend
Preference is declared and paid, the Trustees may declare annually, in their
discretion, a Common Share dividend which may not exceed the amount of the
Preferred Share dividend for such year.  Any distributions in excess of the
above amounts are required to be distributed pro rata among the Preferred Shares
and the Common Shares as a single class.

On May 11, 1998, the Trust issued to Chateau 19,139 Common Shares at a price per
share of $25 upon conversion of $478,475 of a $5.5 million loan from Chateau.
In connection with the issuance of such Common Shares, the Trust relied upon the
exemption from registration contained in Section 4(2) of the Securities Act of
1933, as amended, and the rules and regulations of the Securities Exchange
Commission promulgated thereunder.

Item 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS
         ------------------------------------

Overview
--------

The following discussion should be read in conjunction with the Consolidated
Financial Statements and Notes thereto included elsewhere in this Annual Report.

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

The Trust incurred net losses of $22,400 and $364,000 for the years ended
December 31, 1997 and 1998, respectively.  The increase in the loss is mainly
attributable to the increase in interest and depreciation as a result of the
acquisitions in 1998. The net loss per common share was $1.88 in 1997 and $4.88
in 1998.

Rent and utilities revenues increased from $956,100 in 1997 to $1,703,300 in
1998.  The increases were due to the acquisitions in 1998 as well as rent
increases in the existing properties.

Equity in earnings (losses) of joint ventures, which represents the Trust's 40%
interest in the net income of the Long Lake manufactured home community, and 11%
interest in Apache and Denali, decreased slightly from a loss of $30,600 in 1997
to a loss of $27,800 in 1998.  Occupancy in both Apache and Denali increased
from 81% in 1997 to 92.7% and 90.7%, respectively, in 1998.

                                       9

<PAGE>
 
Interest income decreased slightly from $5,000 in 1997 to $1,500 in 1998 due
mainly to lower cash balances maintained by the Trust.

Property operating expenses increased from $456,800 in 1997 to $822,700 in 1998
due mainly to the acquisitions in 1998.

Interest expense increased from $227,700 in 1997 to $652,000 in 1998 due mainly
to the debt incurred as a result of the acquisitions in 1998.

Depreciation expense increased from $163,100 in 1997 to $349,300 due to the
acquisitions made in 1998.

Advisory fee expense represents a fee payable to the Advisor for management of
the Trust's business.  The fee is computed based on invested and uninvested
asset levels and is subject to certain subordination provisions.  Advisory fee
expense increased from $54,500 in 1997 to$147,100 in 1998 primarily due to the
acquisitions in 1998.

General and administrative expenses increased from $62,500 in 1997 to $92,800 in
1998. The increase was due to additional costs related to the acquisitions made
in 1998.

The Trust was formed in November 1991 under the laws of the State of California.
At December 31, 1998, the Trust's portfolio was comprised of six wholly-owned
and three partially-owned manufactured home communities containing 1,726
homesites located in four states.

Since its organization, the Trust has elected to qualify as a REIT under the
Code and thus does not generally pay federal corporate income taxes on its
earnings to the extent such earnings are distributed to shareholders.



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

The Trust's principal uses of its liquidity and capital resources have
historically been for distributions to shareholders, property acquisitions,
payment of advisory and management fees and payment of debt service.  To
maintain its qualification as a REIT under the Code, the Trust is required to
distribute to its shareholders at least 95% of its "Real Estate Investment Trust
Taxable Income" as defined in the Code.  The Trust declared quarterly
distributions on its Common Shares of an aggregate of $1.50 per share in each of
1997 and 1998.  In addition, the Trust paid quarterly distributions on its
Preferred Shares of an aggregate of $1.50 per share in each of 1997 and 1998.
Future distributions on the Common Shares will be determined based on actual
results of operations and cash available for distribution.

The Trust's principal source of liquidity is its cash flow generated from
operations generated from its real estate investments.  Net cash provided by
operating activities was $645,600 for the year ended December 31, 1998.  At
December 31, 1998, the Trust's cash and restricted cash amounted to
approximately $26,300.

Net cash used in investing activities was $11,538,600 which was used primarily
for the 1998 acquisitions.

In March 1998, the Trust acquired Woodland Hills, a 627-site manufactured home
community located in Montgomery, Alabama, for $5.5 million.  In order to enable
the Trust to make the acquisition, Chateau offered to make an investment in the
Trust.  The Trustees accepted such offer and, on March 30, 1998, the Trust

                                       10
<PAGE>
 
entered into an agreement with Chateau, pursuant to which Chateau invested $5.5
million in the Trust in exchange for the issuance within 90 days of such
investment of (i) such number of Common Shares (at a price of $25 per share) as
the Trustees may determine; and (ii) promissory notes in a principal amount of
the balance of the investment.  In connection with such investment, on May 11,
1998, the Trust issued to Chateau (i) 19,139 Common Shares; and (ii) two
promissory notes with an aggregate principal amount of $5,001,525.

In November 1998, the Trust acquired Southern.  The purchase price paid for
Southern was $2,350,000, of which $2,000,000 was paid at closing and $350,000
will be paid over the next four years.  In order to purchase Southern, N'Tandem
borrowed $1,950,000 from Chateau at an annual interest rate equal to 1% per
annum above the prime rate established by Bank One, N.A.

In December 1998, the Trust purchased Lexington and Suburban.  Both Lexington
and Suburban are located in Lexington, Maryland.  The aggregate purchase price
for Lexington and Suburban was $4,250,000, of which $3,750,000 was paid at
closing and $500,000 will be paid upon completion of certain obligations
relating to the management of Southern, Lexington and Suburban.  In order to
purchase Lexington and Suburban, N'Tandem borrowed $3,700,000 from Chateau at an
annual interest rate of equal to 1% per annum above the prime rate established
by Bank One, N.A.

At the end of the third quarter of 1998, the Trust negotiated to acquire one
manufactured home community and ownership interests in six other manufactured
home communities from Windsor Park Properties 4. The acquisition is subject to
limited partner approval, which has not yet been obtained. The consummation of
the proposed acquisition is subject to the satisfaction of certain conditions,
including the approval of Windsor's limited partners. The purchase price for
these assets will be paid by the Trust in cash. Substantially all of the funds
required by the Trust to complete the proposed acquisition of these assets will
be supplied by Chateau, in exchange for the issuance by the Trust of an
unsecured promissory note. Pursuant to the terms of the proposed acquisition,
this promissory note will be in a principal amount of $9,000,000 and will bear
interest at an annual rate equal to 1% per annum above the prime rate
established by Bank One, N.A. The Trust and Chateau have discussed the
possibility of converting all or a portion of the principal amount of this
promissory note into Common Shares or Preferred Shares; however, there is no
agreement or understanding between the Trust and Chateau relating to any such
conversion.

The Trust's principal long-term liquidity requirements will be the repayment of
principal on its outstanding mortgage debt and the acquisition of additional
properties pursuant to the Trust's Business Plan.  At December 31, 1998, the
Trust's total mortgage debt, including its proportionate share of joint venture
debt, was $13,672,600, consisting entirely of variable rate debt.  The average
rate of interest on the variable rate debt was 8.60% at December 31, 1998. The 
Trust and affiliated entities are jointly and severally liable for the full
amounts of the loans obtained jointly.

The Trust intends to fund the repayment of its mortgage debt with equity or
other debt financings, including public financings.  In addition, future
acquisitions of properties will be funded through investments by Chateau or by
other third parties in the Trust or with equity or other debt financings,
including public financings.  The availability of such investments or such
financings will influence the Trust's decision to proceed with, and the pace of,
future acquisition activities.

                                       11

<PAGE>
 
Year 2000 Compliance
--------------------

The Advisor has assessed the impact of the year 2000 issue on its reporting
systems and operations.  The year 2000 issue exists because many computer
systems and applications abbreviate dates by eliminating the first two digits of
the year, assuming that these two digits are always 19.  As a result, date-
sensitive computer programs may recognize a date using "00" as the year 1900
rather than the year 2000.  Unless, corrected, the potential exists for computer
system failures or incorrect processing of financial and operational
information, which could disrupt operations

Substantially all of the computer systems and applications and operating systems
in use by the Advisor and Chateau and properties have been, or are in the
process of being upgraded and modified. The Trust is of the opinion that, in
connection with those upgrades and modifications, it, as well as the Advisor and
Chateau, have addressed applicable year 2000 issues as they might affect the
computer systems and applications in use by the Advisor and Chateau and located
at the Trust's properties. The Trust anticipates that implementation of
solutions to any year 2000 issue which it may discover will require the
expenditure of sums which the Trust does not expect to be material.

The Trust is exposed to the risk that one or more of its vendors or service
providers may experience year 2000 problems which impact the ability of such
vendor or service provider to provide goods and services.  Due to the
availability of alternative suppliers, this is not considered as significant a
risk with respect to the suppliers of goods.  The disruption of certain
services, however, such as utilities, could, depending upon the extent of the
disruption, have a material adverse impact on the Trust's operations.  To date,
the Trust is not aware of any vendor or service provider year 2000 issue that
management believes would have a material adverse impact on the Trust's
operations if the Trust, however, has no means of ensuring that its vendors or
service providers will be year 2000 ready.  The inability of vendors or service
providers to complete the year 2000 resolution process in a timely fashion could
have an adverse impact on the Trust and the effect of non-compliance by vendors
or service providers is not determinable at this time.  Residents who pay rent
to the Trust do not pose Year 2000 problems for the Trust given the type and
nature of the Trust's properties and residents.

Widespread disruptions in the national or international economy, including
disruptions affecting the financial markets, resulting from year 2000 issues, or
in certain industries, such as commercial or investment banks, could also have
an adverse impact on the Trust.  The likelihood and effect of such disruptions
is not determinable at this time.

The Advisor expects to have all systems appropriately modified before any
significant processing malfunctions could occur and does not expect the year
2000 issue will materially impact the financial condition or operations of the
Trust.

                                       12

<PAGE>
 
Item 7.  FINANCIAL STATEMENTS
         --------------------

The following financial statements are filed as a part of this report:
<TABLE>
<CAPTION>
 
                                                             Page
                                                             ----
<S>                                                         <C>
 
Report of Independent Accountants                              14
 
Consolidated Balance Sheet as of December 31, 1998             15
 
Consolidated Statements of Operations for the years ended
 December 31, 1998 and 1997                                    16
 
Consolidated Statements of Shareholders' Equity for
 the years ended December 31, 1998 and 1997                    17
 
Consolidated Statements of Cash Flows for the years ended
 December 31, 1998 and 1997                                    18
 
Notes to Consolidated Financial Statements                     19
</TABLE>

                                       13

<PAGE>
 
Report of Independent Accountants

To the Shareholders of N'Tandem Trust:

In our opinion, the accompanying consolidated balance sheet and the related
consolidated statements of operations, shareholders' equity and cash flows
present fairly, in all material respects, the financial position of N'Tandem
Trust (the "Trust") at December 31, 1998, and the results of its operations and
its cash flows for each of the two years in the period ended December 31, 1998,
in conformity with generally accepted accounting principles. These financial
statements are the responsibility of the Trust's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally accepted
auditing standards which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.



PricewaterhouseCoopers LLP
Denver, Colorado
March 19, 1999

                                       14

<PAGE>
 
<TABLE>
<CAPTION>
                                          N'TANDEM TRUST
                                          --------------
                                    CONSOLIDATED BALANCE SHEET
                                    --------------------------
 
                                                                              December 31, 1998
                                                                          -------------------------
ASSETS
<S>                                                                        <C>       
 
Property held for investment, net                                          $            16,352,800
Investments in joint ventures and limited partnerships                                     806,600
Cash and cash equivalents                                                                   26,300
Deferred financing costs, net                                                               42,100
Other assets                                                                               469,000
                                                                         -------------------------
 
Total Assets                                                               $            17,696,800
                                                                         =========================
 
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------

Liabilities:
  Mortgage note payable                                                    $             2,050,000
  Note payable to affiliate                                                             10,651,500
  Accounts payable                                                                           7,000
  Accrued expenses                                                                         626,400
  Other liabilities                                                                      1,021,700
  Due to Advisor and Affiliates                                                            727,100
                                                                         ------------------------- 
                                                                                        15,083,700
Total Liabilities

Commitments and Contingencies (Note 9)
 
Shareholders' Equity:
  Preferred shares of beneficial interest, no par value; unlimited
  Shares authorized; 98,073 shares issued and outstanding                                2,121,700
 
  Common shares of beneficial interest, no par value; unlimited
  Shares authorized; 109,308 shares issued and outstanding                               2,401,400
 
  Dividends in excess of accumulated earnings                                           (1,910,000)
                                                                         -------------------------
 
 
Total Shareholders' Equity                                                               2,613,100
                                                                         -------------------------
 
Total Liabilities and Shareholders' Equity                                 $            17,696,800
                                                                         =========================
</TABLE>



                See accompanying notes to financial statements.

                                       15
<PAGE>
 
<TABLE>
<CAPTION>
                                              N'TANDEM TRUST
                                              --------------
                                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                   -------------------------------------
 
 
 
                                                                  For The Year Ended December 31,
                                                       --------------------------------------------------
                                                                  1998                      1997
                                                       ------------------------     ---------------------
<S>                                                    <C>                          <C>                
REVENUES
--------
Rent and utilities                                       $            1,703,300       $           956,100
Equity in earnings (losses) of joint ventures and
 limited partnerships                                                   (27,800)                  (30,600)
Interest                                                                  1,500                     5,000
Other                                                                    22,900                    11,700
                                                       ------------------------     ---------------------
 
                                                                      1,699,900                   942,200
                                                       ------------------------     ---------------------
 
COSTS AND EXPENSES
------------------
Property operating                                                      822,700                   456,800
Interest                                                                652,000                   227,700
Depreciation                                                            349,300                   163,100
Advisory fee                                                            147,100                    54,500
General and administrative:
  Related parties                                                        28,800                    29,800
  Other                                                                  64,000                    32,700
                                                       ------------------------     ---------------------
 
                                                                      2,063,900                   964,600
                                                       ------------------------     ---------------------
 
Net loss                                                 $             (364,000)      $           (22,400)
 
Preferred dividends Paid                                               (147,100)                 (147,100)
                                                       ------------------------     ---------------------
 
Net loss attributable to common shares                   $             (511,100)      $          (169,500)
                                                       ========================     =====================
 
Basic and diluted loss per common share                  $                (4.88)      $             (1.88)
                                                       ========================     =====================
 
Dividends per common share                               $                 1.50       $              1.50
                                                       ========================     =====================
</TABLE>



                See accompanying notes to financial statements.

                                       16
<PAGE>
 
<TABLE>
<CAPTION>
                                                           N'TANDEM TRUST
                                                           --------------

                                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                          -----------------------------------------------

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

 
                                                                                        Dividends
                                                                                      In excess of
                                Preferred                    Common                    Accumulated
                                 Shares                      Shares                     Earnings                      Total
                     ---------------------------     ---------------------      ----------------------      -----------------------
<S>                  <C>                             <C>                        <C>                         <C> 
Balance at
 December 31, 1996              $      2,121,700          $      1,922,900           $        (947,800)          $        3,096,800

Net Loss                                                                                       (22,400)                     (22,400)

Dividends Preferred                                                                           (147,100)                    (147,100)

Dividends Common                                                                              (135,300)                    (135,300)

Balance at
December 31, 1997               ----------------          ----------------          ------------------           ------------------
                                       2,121,700                 1,922,900                  (1,252,600)                   2,792,000
                                ----------------          ----------------          ------------------           ------------------


Shares issued in
 connection with
 acquisitions                                                      478,500                                                  478,500
 
 
 
Net Loss                                                                                      (364,000)                    (364,000)
Dividends Preferred                                                                           (147,100)                    (147,100)
Dividends Common                                                                              (146,300)                    (146,300)
                                ----------------          ----------------          ------------------           ------------------
Balance at
December 31, 1998
                                $      2,121,700          $      2,401,400          $       (1,910,000)          $        2,613,100
                                ================          ================          ==================           ==================
</TABLE>



                 See accompanying notes to financial statements

                                       17
<PAGE>
 
                                 N'TANDEM TRUST
                                 --------------
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
                                        
<TABLE>
<CAPTION>
                                                                     For The Year Ended December 31,
                                                       ---------------------------------------------------------
 
                                                                   1998                          1997
                                                       ---------------------------     -------------------------
<S>                                                    <C>                             <C>
Cash flows from operating activities:
 Net loss                                                   $             (364,000)        $             (22,400)
 Adjustments to reconcile net loss to net cash
  provided by
   operating activities:
   Depreciation                                                            349,300                       163,100
   Equity in (earnings) losses of joint ventures
      and limited partnerships                                              27,800                        30,600
  Joint ventures' cash distribution                                        (27,800)
   Loss on sale of property                                                      0                         3,000
   Amortization of deferred financing costs                                 11,100                        13,200
 
Changes in operating assets and liabilities:
   (Increase) decrease in other assets                                    (367,200)                       34,200
   Increase (decrease) in accounts payable                                   1,200                        (8,900)
   Increase (decrease) in accrued expenses                                 593,200                       (25,000)
   Increase (decrease) in tenant deposits and other                        171,600                       (20,800)
    liabilities
   Increase (decrease) in Due to Advisor and Affiliates                    250,300                       (26,700)
                                                       ---------------------------     -------------------------
 
Net cash provided by operating activities                                  645,500                       140,300
                                                       ---------------------------     -------------------------
 
Cash flows from investing activities:
  Increase in property held for investment                             (11,591,300)                      (45,900)
  Increase in investment in joint ventures
    and limited partnerships                                                     0                       (26,100)
  Proceeds from sale of property                                                 0                     1,704,000
  Joint Ventures' and limited partnerships'
    cash distributions                                                      52,700                         6,000
                                                       ---------------------------     -------------------------
 
Net cash provided by operating activities                              (11,538,600)                    1,638,000
                                                       ---------------------------     -------------------------
 
Cash flows from financing activities:
  Issuance of shares                                                       478,500
  Dividends paid                                                          (293,400)                     (282,400)
  Proceeds from Note due to Chateau                                     10,651,500
  Repayment of mortgage notes payable                                            0                    (1,313,800)
  Repayment of loan from affiliate                                               0                      (241,300)
                                                       ---------------------------     -------------------------
 
Net cash provided by (used in) financing activities                     10,836,600                    (1,837,500)
                                                       ---------------------------     -------------------------
 
Net decrease in cash and cash equivalents                                  (56,500)                      (59,200)
 
Cash and cash equivalents at beginning of year                              82,800                       142,000
                                                       ---------------------------     -------------------------
 
Cash and cash equivalents at end of year                    $               26,300         $              82,800
                                                       ===========================     =========================
 
Supplemental disclosure of cash flow information:
  Cash paid during the year for:
    Interest (none capitalized)                             $              219,350         $             238,100
                                                       ===========================     =========================
</TABLE>
                                                                               

                 See accompanying notes to financial statements.

                                       18
<PAGE>
 
                                N'TANDEM TRUST
                                --------------
                                        
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                  ------------------------------------------
 

NOTE 1.  THE TRUST AND A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ----------------------------------------------------------

The Trust
---------

N'Tandem Trust, an unincorporated California business trust (the Trust), was
formed in November 1991 for the purpose of acquiring, managing and selling
existing manufactured "home" communities.  The Advisor of the Trust is The
Windsor Corporation ("The Advisor"), a California corporation. In September
1997, Chateau Communities, Inc ("Chateau"), a publicly traded real estate
investment trust, purchased 100% of the shares of the Advisor.

The Trust was funded through a public offering of common and preferred shares
which commenced in April 1992 and terminated in April 1993.

On September 23, 1998 the Trust provided to Shareholders a Proxy Statement
seeking the approval of the Trust's shareholders of (i) the conversion of the
Trust from a finite-life entity to an infinite-life entity ("Proposal 1"); (ii)
the amendment and restatement of the Trust's Declaration of Trust (the "Amended
Declaration"), and the adoption of By-laws for the Trust ("Proposal 2", and
together with Proposal 1, the "Organizational Amendments"); (iii) the approval
of a stock option plan for the Trust, through the approval and adoption of the
proposed form of the 1998 Equity Compensation Plan (the "Equity Compensation
Plan Approval" or "Proposal 3"); and (iv) the annual election of trustees of the
Trust.  The Proposals were presented and approved by the shareholders at the
Annual Meeting of Shareholders of the Trust held on October 23, 1998.

The principal purposes of the Organizational Amendments were to convert the
Trust from a finite-life to an infinite-life entity, and to remove various
restrictions and limitations and other requirements contained in the existing
Declaration of Trust of the Trust which are not typically found in the more
modern organizational documents of leading real estate investment trusts.  The
Amended Declaration also provided for changing the name of the Trust from
"Windsor Real Estate Investment Trust 8" to "N' Tandem Trust."

As a result of the approval of the Organizational Amendments, the Trust now
intends to move forward with certain transactions and to effect certain changes
including the following: (i) the Trust will complete its restructuring as an
"umbrella partnership" REIT in order to facilitate tax-free and/or tax-deferred
acquisitions of additional properties, (ii) the Trust will begin implementing a
growth-oriented business plan (the "Business Plan") intended to cause the Trust
to attain greater size and asset diversity; and (iii) if successful in the
implementation of the Business Plan, the Trust anticipates that it will seek to
list the Common Shares on a national securities exchange or NASDAQ, and if
deemed appropriate, raise additional capital through an underwritten public
offering of the Common Shares or other securities of the Trust.

The Trust's current portfolio of properties is comprised of a 100 percent
ownership interest in six manufactured home community properties and a 40
percent, 11 percent, and 11 percent interest, respectively, in three other
manufactured home community properties.  The Trust believes that significant
opportunities exist to acquire additional properties that fit the investment
objectives and guidelines set forth in its Business Plan.  The Trust anticipates
that it will focus on acquisitions where the Trust believes there is substantial
opportunity to improve operational and financial results or where for some
reason, because of poor management or otherwise, a property is operating
substantially below its potential.

                                       19

<PAGE>
 
Additionally, Chateau has advised the Trust that it intends to announce that the
Trust will be a primary vehicle through which Chateau will make investments in
manufactured home communities that do not fit the core asset type typical of the
existing Chateau portfolio, which is characterized by large, stable,
institutional-quality, full amenitized properties.  The Trust will employ higher
levels of leverage than Chateau and will focus primarily on "lower profile
assets", meaning properties that (i) are typically not part of a portfolio of
manufactured housing community properties; (ii) are located in tertiary
demographic and geographic markets; (iii) are not managed by a nationally known
manufactured home community operator; (iv) may be managed by an on-site owner
who lives at the property; and (v) may be smaller and are likely to have fewer
amenities and a greater proportion of single-wide homes than the typical Chateau
community.  The Trust believes that its affiliation with Chateau will benefit
the Trust by providing it with access to Chateau's national organization,
management team and investment and management philosophies.  Through its
affiliation with Chateau, the Trust believes that it will be exposed to a wider
range of acquisition opportunities as a result of Chateau's national
organization and knowledge of the manufactured housing community industry and
will benefit from Chateau's expertise in effectively and efficiently managing
properties.

Principles of Consolidation
---------------------------

The accompanying consolidated financial statements include accounts of the Trust
and its wholly owned subsidiaries.

Property Held for Investment
----------------------------

Property held for investment is carried at cost unless facts and circumstances 
indicate that the carrying value of the property may be impaired. Impairment is 
determined by comparing the estimated future cash flows (undiscounted and 
without interest charges) from an individual property to its carrying value. If 
such cash flows are less than the property's carrying value, the carrying value 
of the project is written down to its estimated fair value. No such writedowns 
were recorded for the years ended December 31, 1998 or 1997.

Property held for investment is depreciated over various estimated useful lives
(building and improvements - 5 to 20 years; fixtures and equipment - 3 to 5
years) using the straight-line method. When assets are sold or otherwise
disposed of, the cost and related accumulated depreciation are removed from the
accounts, and any gain or loss is included in net income. Repairs and
maintenance are charged to operations as incurred.

In March of 1998, the Trust acquired a 627-site manufactured home community in
Montgomery, Alabama, for $5.5 million (the "Montgomery Acquisition").  In order
to enable the Trust to make the acquisition, Chateau offered to make an
investment in the Trust.  The Trustees accepted such offer and, on March 30,
1998, the Trust entered into an agreement with Chateau, pursuant to which
Chateau invested $5.5 million in the Trust (the "Chateau Investment") in
exchange for the issuance within 90 days of such investment of (i) such number
of Common Shares of beneficial interest offering Trust (the "Common Shares") (at
a price of $25 per share) as the Trustees may determine; and (ii) promissory
notes in a principal amount of the balance of the investment (the "Promissory
Notes").  In connection with the Chateau Investment, on May 11, 1998, the Trust
issued to Chateau (i) 19,139 Common Shares (at a price of $25 per share); and
(ii) two Promissory Notes with an aggregate principal amount of $5,001,525.

In November 1998, the Trust purchased Southern Mobile Home Community, a
community containing 201 sites located in Lexington Park, Maryland.  The
purchase price was $2,350,000, of which $2,000,000 was paid at closing and
$350,000 will be paid over the next four years.  In order to purchase the
community, the Trust borrowed $1,950,000 from Chateau at a rate of Prime plus
one percent per annum.

In December 1998, the Trust purchased two communities, Lexington Manufactured
Home Community, containing 76 homesites and Suburban Manufactured Home
Community, containing 135 homesites, both located in Lexington, Maryland (the
"Lexington Acquisition").  The Lexington Acquisition was completed for a
purchase price of $4,250,000, of which $3,750,000 was paid at closing and
$500,000 will be paid upon completion of certain obligations relating to the
management of the Lexington Properties.  In order to complete the acquisition,
the Trust borrowed $3,700,000 from Chateau at a rate of Prime plus one percent
per annum.

The following unaudited pro forma income statement information has been prepared
as if the significant acquisitions made in 1998 had occurred on January 1, 1997.
The pro forma income statement is not indicative of the results which actually
would have occurred if these acquisitions had been consummated on January 1,
1997.

                                1998               1997
                                ----               ----

Revenues                   $ 2,948,400        $ 2,939,000
                           ===========        ===========

Total Expenses             $ 3,594,200        $ 3,525,800
                           ===========        ===========

Net loss attributable
 to common shares          $  (792,912)       $  (733,900)
                           ===========        ===========

Basic and diluted loss
 per common share          $     (7.25)       $     (6.71)
                           ===========        ===========

                                      20


<PAGE>

Investment in Joint Ventures and Limited Partnerships
-----------------------------------------------------

The investment in joint ventures are accounted for by utilizing the equity
method of accounting as the properties are subject to joint control requiring
approval or mutual agreement of the investees.  The investment in limited
partnerships are also accounted for utilizing the equity method as the Limited
Partners have significant rights.
 
Financing Costs
---------------

Financing costs are amortized to interest expense over the life of the note
utilizing a method, which approximates the effective interest method.

Income Taxes
------------

The Trust operates in a manner intended to enable it to qualify as a real estate
investment trust ("REIT")under Sections 856 through 860 of the Internal Revenue
Code of 1986, as amended.  Under those sections, a REIT which distributes at
least 95% of its investment trust taxable income to its shareholders each year
and which meets certain other conditions will not be taxed on that portion of
its taxable income which is distributed to its shareholders.  The Trust intends
to continue to qualify and to distribute substantially all of its taxable income
to its shareholders.  Therefore, no provision for Federal income taxes is
required.

Basic and Diluted Loss per Common Share
---------------------------------------

Basic and diluted loss per common share calculated is based on the weighted
average number of common shares outstanding during the year and income available
to the common shareholders.  Basic and diluted earnings per common share are the
same, as the Trust has no dilutive securities.  The weighted average number of
common shares outstanding during the years ended December 31, 1998 and 1997 was
104,641 and 90,169, respectively.

Statements of Cash Flows
------------------------

For purposes of the statements of cash flows, the Trust considers all highly-
liquid investments purchased with an original maturity of three months or less
to be cash equivalents.


Use of Estimates
----------------

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

Revenue Recognition
-------------------

Rental income is recognized when earned and due from residents.  The leases
entered into by residents for the rental of a site are generally for terms not
longer than one year and renewable upon the consent of both parties or, in some
instances, as provided by statute.

NOTE 2.  AMENDED AND RESTATED DECLARATION OF TRUST
         -----------------------------------------

In accordance with the Amended and Restated Declaration of Trust, no shareholder
shall be personally liable for any liabilities, debts or obligations of, or
claims against the Trust.  The number of common and preferred shares outstanding
at December 31, 1998  was 109,308 and 98,073, which represented capital
contributions of $2,732,725 and $2,451,825.

The Advisor is entitled to receive from the Trust various fees and compensation
which are summarized as follows:

                                       21

<PAGE>
 
Operational Stage
-----------------

For management of the Trust's business, the Advisor earns an advisory fee of 1%
of invested assets and .5% of uninvested assets.  The fee is subject to
limitation if the Trust's total operating expenses (as defined) exceed the
greater of 2% of the Trust's average invested assets or 25% of the Trust's net
income.  The fee is also subordinated to preferred shareholders receiving a
minimum of 6% and maximum of 7% annual cumulative dividend, and to common
shareholders receiving a 6% annual noncumulative dividend.  Advisory fees of
$147,100 and $54,500 were accrued during the years ended December 31, 1998 and
1997, respectively.

The Trust reimburses the Advisor for certain direct expenses and employee,
executive and administrative time which are incurred on the Trust's behalf.  The
Trust was charged $28,800 and $34,500 for such costs during the years ended
December 31, 1998 and 1997, respectively.  These costs are included in property
operating and general and administrative expenses in the accompanying Statements
of Operations. As of December 31, 1998, the Trust owed the Advisor $727,100 for
advisory fees and other operating expenses and $418,700 to Chateau for interest
on the secured and unsecured notes.

Liquidation Stage
-----------------

During the Trust's liquidation stage, the total compensation paid to all persons
for the sale of Trust properties is limited to competitive real estate brokerage
fees, not to exceed 6% of the contract price for the sale of the property.  The
Advisor may receive up to one-half of the competitive real estate brokerage
fees, not to exceed 3%, if it provides a substantial amount of the services in
the sales effort.

The Advisor also receives 15% of cash distributions from the sale or financing
of Trust properties.  The participation is subordinated to preferred
shareholders receiving a return of capital plus an 8% per annum cumulative, non-
compounded return; and to common stockholders receiving a return of capital plus
a 10% per annum cumulative, non-compounded return.  Returns are computed on a
property-by-property basis.

NOTE 3.  PROPERTY HELD FOR INVESTMENT
         ----------------------------

Property held for investment consists of six manufactured home communities
summarized as follows:

<TABLE>
<CAPTION>
Name of Property      Date Acquired         Location
------------------  -----------------  -------------------
<S>                 <C>                <C>
 
West Star           January 15, 1993   Tucson, Arizona
El Frontier         February 18, 1994  Tucson, Arizona
Woodland Hills      March 30, 1998     Montgomery, Alabama
Southern            November 30, 1998  Lexington Park, Maryland
Suburban            December 2, 1998   Lexington Park, Maryland
Lexington           December 2, 1998   Lexington Park, Maryland
</TABLE>

<TABLE>
<CAPTION>
                                                                          December 31, 1998
                                                                     ---------------------------
<S>                                                                    <C>       
Land                                                                   $               4,737,300
Buildings and improvements                                                            12,555,400
Furniture and equipment                                                                   74,100
                                                                     ---------------------------
 
                                                                                      17,366,800
Less accumulated depreciation                                                          1,014,000
                                                                     ---------------------------
 
                                                                       $              16,352,800
                                                                     ===========================
</TABLE>

                                       22
<PAGE>
 
NOTE 4.  INVESTMENT IN JOINT VENTURES AND LIMITED PARTNERSHIPS
         -----------------------------------------------------

The Trust's investments in joint ventures and limited partnerships consist of
interests in three manufactured home communities at December 31, 1998.

The condensed financial position and results of operations of the joint ventures
and limited partnerships are as follows (unaudited):

<TABLE>
<CAPTION>
                                                                          December 31, 1998
                                                                        -------------------------
Financial Position
------------------
<S>                                                                       <C>       
 
Property held for investment, net                                         $             7,906,300
Cash                                                                                       34,600
Other assets                                                                              179,400
                                                                        -------------------------
 
    Total assets                                                          $             8,120,300
                                                                        =========================
 
Mortgage note payable                                                     $             4,609,400
Accounts payable                                                                            8,600
Other liabilities                                                                         103,900
                                                                        -------------------------
 
    Total liabilities                                                                   4,721,900
 
Partners' equity                                                                        3,398,400
                                                                        -------------------------
 
Total liabilities and Partners' equity                                    $             8,120,300
                                                                        =========================
</TABLE>


<TABLE>
<CAPTION>
 
                                                     Year Ended                     Year Ended
                                                   December 31,1998              December 31, 1997
                                                -----------------------      -------------------------
Results of Operations
---------------------
 
<S>                                               <C>       <C>                <C>       <C>
Property revenues                                 $           1,211,000        $             1,089,100
 
Expenses:
  Property operating                                            690,000                        654,300
  Interest                                                      436,000                        353,200
  Depreciation                                                  280,400                        242,400
                                                -----------------------      -------------------------
 
                                                              1,406,400                      1,249,900
                                                -----------------------      -------------------------
 
Net (Loss)                                        $            (195,400)       $              (160,800)
                                                =======================      =========================
</TABLE>

                                       23
<PAGE>
 
NOTE 5. NOTES PAYABLE AND OTHER LIABILITIES
        -----------------------------------

Mortgage notes payable consist of the following at December 31, 1998:

<TABLE>
<CAPTION>
Property                        Principal Outstanding    Interest Rate   Maturity
------------------------------  ---------------------    -------------  ---------
<S>                             <C>                      <C>            <C>
Weststar/El Frontier                       $2,050,000            8.23%      2002
Secured notes to Chateau                   $9,300,500            8.75%      1999
Unsecured notes to Chateau                 $1,350,900            8.75%      1999
</TABLE>

Included in other liabilities are the deferred payments incurred during the 1998
acquisition, including $350,000 incurred in the Southern acquisition, to be paid
over the next four years and $500,000 incurred on the Lexington acquisition to
be paid upon completion of certain obligations relating to the management of the
Lexington properties.

NOTE 6.  COMMON AND PREFERRED SHARES
         ---------------------------

Preferred shareholders receive a minimum of 6% and a maximum of 7% cumulative,
preferred dividend, the preferred dividend rate to be established annually by
the Board of Trustees.  After the payment of preferred dividends, common
shareholders are eligible to receive a noncumulative dividend equal to the
preferred dividend rate for that year.  Any further dividends declared are paid
equally on a per share basis to common and preferred shareholders.  The
preferred dividend rate, as established by the Board of Trustees, was 6% for
both of the years ended December 31, 1998 and 1997.

For federal income tax purposes, earnings and profits of the Trust will be
allocated to preferred and common shareholders in accordance with their dividend
priorities.  Accordingly, taxable income is first allocated to preferred
shareholders to the extent of their dividend priority.

NOTE 7. STOCK OPTION PLAN
        -----------------
During 1998, the Trust adopted an Equity Compensation Plan, which allows for the
grant of incentive stock options, non-qualified stock options, restricted shares
and dividend equivalent rights. For the year ended December 31, 1998, 5,000 
options were granted, none were exercised, and none were forfeited. The options 
vest after one year and have an exercise price of $25, which approximates fair 
value at the grant date. The pro forma effects of the grants, under SFAS 123 
"Accounting for Stock Based Compensation" ("SFAS 123") are immaterial to net 
income. As permitted by SFAS 123, the Trust elected to use Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees" and related 
interpretations, in accounting for its stock option plan. No compensation 
expense was recognized for the year ended December 31, 1998.

NOTE 8.  FAIR VALUE OF FINANCIAL INSTRUMENTS
         -----------------------------------

The carrying amounts of cash equivalents, receivables, accounts payable, accrued
expenses and other liabilities approximate fair value because of the short
maturity of these financial instruments.  The mortgage note payable bears
interest at a variable rate indexed to either Treasury Bills, LIBOR; or Prime;
therefore, the Advisor believes the carrying values of the notes approximate
fair value.

NOTE 9.  CONTINGENCIES
         -------------

The Trust, as an owner of real estate, is subject to various environmental
laws.  Compliance by the Company with existing laws has not had a material
effect on the results of operations, financial condition or cash flows of the
Trust, nor does management believe it will have a material impact in the
future. The Trust is jointly and severally liable for $4,609,400 of debt issued 
by affiliated entities in which it has a joint venture or limited partnership 
investment.

NOTE 10.  RELATED PARTY TRANSACTIONS
         --------------------------

Chateau and/or its predecessor have been providing property management services
to the Trust since 1992. For this service, Chateau is paid a property management
fee, which is based on a percentage of actual gross receipts of the properties.
The total management fees paid to Chateau were $80,000 and  $48,200 for the
years ended December 31, 1998 and 1997, respectively. In addition certain direct
expenses are paid by Chateau on behalf of the Trust and then reimbursed by the
Trust. These amounts were $203,300 and $78,000 for the years ended December 31,
1998 and 1997, respectively.

                                       24

<PAGE>
 
Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         ---------------------------------------------------------------
         FINANCIAL DISCLOSURE
         --------------------

There were no disagreements over accounting or financial disclosure with the
independent accountants for the Trust.


Item 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         -------------------------------------------------------------
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
         -------------------------------------------------

The names, ages, and nature of the positions held by the Directors and executive
officers of the Trust follow:
<TABLE>
<CAPTION>
                      Name                                 Age                               Office
------------------------------------------------     -------------     ------------------------------------------------
<S>                                                  <C>               <C>
Gary P. McDaniel                                           53          Chairman of the Board of Trustees
Kenneth G. Pinder                                          63          Director
Richard B. Ray                                             58          Director
</TABLE>

A brief background of the Directors and executive officers of the Trust follows:

Gary P. McDaniel (53) has been Chief Executive Officer and a director of Chateau
Communities, Inc. since February 1997.  He served as the Chairman of the Board,
President and Chief Executive Officer for ROC Communities, Inc.  since 1993, has
been a principal of ROC and its predecessors since 1979, and has been active in
the manufactured home industry since 1972.  Mr. McDaniel has been active in
several state and national manufactured home associations, including
associations in Florida and Colorado.  In 1996, he was named "Industry Person of
the Year" by the National Manufactured Housing Industry Association.  Mr.
McDaniel is on the Board of Directors of the Manufactured Housing Institute.  He
is a graduate of the University of Wyoming and served as a Captain in the United
States Air Force.

Richard B. Ray (58); Since 1995 Co-Chairman of the Board and Chief Financial
Officer of the 21st Century Mortgage, (a lender to the manufactured home
industry); Director of the following companies: BankFirst, Radio Systems
Corporation, and N'Tandem Trust, Director of Knox County, Tennessee. Previously,
Executive Vice President, Chief Financial Officer and Director of Clayton Homes
Inc. (a vertically integrated manufactured housing company) form 1982-1994; a
Director of Palm Harbor Homes, Inc. (a national producer of manufactured homes)
from 1994-1995.

Kenneth G. Pinder (63); Entered the housing business in 1970 managing a
Manufactured Housing site rental community.  Formed American Living Homes, Inc.,
a Manufactured Housing Dealership, in 1974.  Continues to be the owner and
president of this corporation.  Sole owner of Able Mobile Housing, Inc., a
temporary housing company for fire loss victims.  He has developed mobile
homesites and purchased and sold numerous communities over the past twenty
years.  Mr. Pinder has been a member of the Michigan Manufactured Housing
Association for over 25 years.  In 1992 he was elected to the Michigan
Manufactured Housing Board of Directors.  He was also elected to the Executive
Committee of the Board.


Item 10.  EXECUTIVE COMPENSATION
          ----------------------

Information regarding compensation the Trustees of the Trust appears in the
Trust's proxy statement for its 1999 Annual Meeting of Shareholders and is
incorporated herein by reference.

                                       25

<PAGE>
 
Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
          --------------------------------------------------------------

The table of beneficial ownership of the Trust appears in the Trust's proxy
statement for its 1999 Annual Meeting of Shareholders and is incorporated herein
by reference.

 
Item 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
          ----------------------------------------------

Information regarding certain relationships and related transactions appears in
the Trust's proxy statement for its 1999 Annual Meeting of Shareholders and is
incorporated herein by reference.


Item 13.  EXHIBITS AND REPORTS ON FORM 8-K
          --------------------------------

  (a)  Exhibits and Index of Exhibits
 
<TABLE>
<CAPTION>
Exhibit                                                                                                                      
------------------                                                                                                      Page        
Number                                                      Description                                                Number       
------------------  --------------------------------------------------------------------------------------------  ----------------- 
 
<C>                 <S>                                                                                           <C>
               3.1  Amended and Restated Declaration of Trust*
               3.2  By-laws of the Company**
              10.3  1998 Equity Compensation Plan***
              10.4  Investment Agreement by and between Windsor Real Estate Investment Trust 8 and Chateau
                    Communities, Inc.****
               21.  List of Subsidiaries
               27.  Financial Data Schedule
</TABLE>
_____________________
*    Filed as Appendix A to the Company's Proxy Statement for its 1998 Annual
     Meeting of Shareholders filed with the Commission on September 17, 1998.
**   Filed as Appendix B to the Company's Proxy Statement for its 1998 Annual
     Meeting of Shareholders filed with the Commission on September 17, 1998.
***  Filed as an attachment the Company's Proxy Statement for its 1998 Annual
     Meeting of Shareholders filed with the Commission on September 17, 1998.
**** Filed as Exhibit 7.1 to Schedule 13D (Amendment No. 2) of Chateau
     Communities, Inc. filed with the Commission on December 18, 1998.

     (b)  Reports on Form 8-K

The Trust filed on December 14,1998 a Current Report on Form 8-K, dated November
30, 1998, reporting the acquisition of Southern Mobile Home Community, Lexington
Manufactured Home Community and Suburban Manufactured Home Community, all
located in Lexington Park, Maryland.  On February 12, 1999, the Company filed on
Form 8-K/A the financial statements relating to the acquisitions reported on the
Form 8-K, dated November 30, 1998.

     The financial statements filed were as follows:
 
     The Audited Historical Summary of Revenues and Direct Operating Expenses
     for Lexington Manufactured Home Community and Suburban Manufactured Home
     Community for the year ended December 31, 1997.

                                       26

<PAGE>
 
     The Audited Historical Summary of Revenues and Direct Operating Expenses
     for Southern Mobile Home Community for the year ended December 31, 1997.
 
     The pro forma financial statements filed were as follows:

     Pro Forma Condensed Statements of Operations of the Trust for the nine
     months ended September 30, 1998 and for the year ended December 31, 1997
     (Unaudited).

     Pro Forma Condensed Balance Sheet of the Trust as of September 30, 1998
     (Unaudited).


                                 Exhibit Index
                                        
<TABLE>
<CAPTION>
Exhibit                                                                                                                             
------------------                                                                                                      Page        
Number                                                      Description                                                Number       
------------------  --------------------------------------------------------------------------------------------  ----------------- 
 
<C>                 <S>                                                                                           <C>
               3.1  Amended and Restated Declaration of Trust*
               3.2  By-laws of the Company**
              10.3  1998 Equity Compensation Plan***
              10.4  Investment Agreement by and between Windsor Real Estate Investment Trust 8 and Chateau
                    Communities, Inc.****
               21.  List of Subsidiaries
               27.  Financial Data Schedule
</TABLE>
_____________________
*    Filed as Appendix A to the Company's Proxy Statement for its 1998 Annual
     Meeting of Shareholders filed with the Commission on September 17, 1998.
**   Filed as Appendix B to the Company's Proxy Statement for its 1998 Annual
     Meeting of Shareholders filed with the Commission on September 17, 1998.
***  Filed as an attachment the Company's Proxy Statement for its 1998 Annual
     Meeting of Shareholders filed with the Commission on September 17, 1998.
**** Filed as Exhibit 7.1 to Schedule 13D (Amendment No. 2) of Chateau
     Communities, Inc. filed with the Commission on December 18, 1998.
 

                                       27

<PAGE>
 



                                 SIGNATURES


  Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on this  31st day of March,
1999.


                                N'TANDEM TRUST

                           By: /s/ Gary P. McDaniel
                    --------------------------------------
                               GARY P. MCDANIEL
                                    Trustee

Date:  March 31, 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.


<TABLE>
<CAPTION>
Signature                                                Title                        Date
--------------------------------------  ---------------------------------------  ---------------
<S>                                     <C>                                      <C> 
/s/ Gary P. McDaniel                   
--------------------------------------     Chairman of the Board of Trustees     March 31, 1999
GARY P. MCDANIEL                        
                                        
                                        
                                        
/s/ Kenneth G. Pinder                   
--------------------------------------     Trustee                               March 31, 1999
KENNETH G. PINDER                       
                                        
                                        
                                        
                                        
/s/ Richard B. Ray                      
--------------------------------------     Trustee                               March 31, 1999
RICHARD B. RAY                          
                                        
</TABLE>

                                       28