SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q/A

(Mark One)

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

                  For the quarterly period ended December 31, 1995

                                       OR

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

                  For the transition period from ____________ to __________


                         Commission File Number 1-6613


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



          Maryland                                          23-1862664
-------------------------------                 --------------------------------
(State or other jurisdiction of                 (I.R.S. Employer Identification)
incorporation or organization)                                  

     120 Albany Street, 8th Floor
      New Brunswick, New Jersey                             08901-2163
----------------------------------------                    ----------
(Address of principal executive offices)                    (Zip Code)


Registrant's telephone number, including area code:    (908) 296-3080
<PAGE>
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.    Yes [ X ]    No [   ].


Indicate  by check mark  whether  the  registrant  has filed all  documents  and
reports  required  to be filed by  Sections  12, 13 or 15 (d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                           Yes [ X ]    No [   ]


Number of Common Shares Outstanding at February 1, 1996:  11,226,310
<PAGE>
                              VALUE PROPERTY TRUST

                                      INDEX
<TABLE>
<CAPTION>
                                                                                     Page
<S>                                                                                    <C>   
Part I:  FINANCIAL INFORMATION

         Item 1.   Financial Statements ...........................................     2

                   Balance Sheet at December 31, 1995 and
                        September 30, 1995 (Unaudited) ............................     2

                   Statement of Operations for the Three Months
                        Ended December 31, 1995 and 1994 (Unaudited) ..............     4

                   Statement of Cash Flows for the Three Months Ended
                           December 31, 1995 and 1994 (Unaudited) .................     5

                   Statement of Shareholders' Equity for the Three
                        Months Ended December 31, 1995 (Unaudited) ................     6

                   Notes to the Financial Statements ..............................     7

         Item  2.  Management's Discussion and Analysis of Financial Condition
                        and Results of Operations .................................    12




Part II:  OTHER INFORMATION

         Item 1.   Legal Proceedings ..............................................    14

         Item 5.   Other Information ..............................................    14

                   Signatures .....................................................    16

</TABLE>

















                                     - 1 -
<PAGE>
                              VALUE PROPERTY TRUST                      FORM 10Q

Part I:  Financial Information

Item 1.  Financial Statements:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
BALANCE SHEET - (Unaudited)
(In Thousands)
-----------------------------------------------------------------------------------------------
                                                                  December 31,    September 30,
                                                                      1995            1995
                                                                  ------------    -------------
<S>                                                                 <C>             <C>     
                               ASSETS
Assets Held for Sale:
   Mortgage loans ..........................................        $ 47,303        $ 21,966
   Investments in partnerships .............................           5,268           5,220
   Real estate owned .......................................          42,835          42,059
   Notes Receivable ........................................             333            --
                                                                    --------        --------
                                                                      95,739          69,245
                                                                    --------        --------
Assets Held for Investment:
   Mortgage loans ..........................................           3,023          35,013
   Investments in partnerships .............................          20,565          20,648
   Real estate owned .......................................          86,620          81,581
   Notes receivable ........................................            --               633
                                                                    --------        --------
                                                                     110,208         137,875
                                                                    --------        --------

Total Invested Assets ......................................         205,947         207,120

Cash and cash equivalents ..................................          17,689           9,977
Restricted cash ............................................           2,455           6,791
Interest receivable and other assets .......................           6,435           8,441
                                                                    --------        --------
                                                                    $232,526        $232,329
                                                                    ========        ========
(Continued)
















                                     - 2 -
<PAGE>
<CAPTION>
-----------------------------------------------------------------------------------------------
BALANCE SHEET - (Unaudited)
(In Thousands)
(Continued)
-----------------------------------------------------------------------------------------------
                                                                  December 31,    September 30,
                                                                      1995            1995
                                                                  ------------    -------------
<S>                                                                 <C>             <C>     
                              LIABILITIES

Senior secured notes (due 2002) ............................        $109,975        $109,975
Mortgage payable ...........................................          13,953          17,535
Accounts payable and accrued expenses ......................           3,960           4,745
Interest payable ...........................................           3,127            --
                                                                    --------        --------
                                                                     131,015         132,255
                                                                    --------        --------
                        SHAREHOLDERS' EQUITY

Preferred shares, $1 par value: 3,500,000 shares authorized,
   none issued .............................................            --              --
Common shares, $1 par value: 20,000,000 shares authorized,
   11,226,310 and 11,226,215 shares issued and outstanding .          11,226          11,226
Additional paid-in capital .................................          88,848          88,848
Retained earnings ..........................................           1,437            --
                                                                    --------        --------
         Total shareholders' equity ........................         101,511         100,074
                                                                    --------        --------

         Total liabilities and shareholders' equity ........        $232,526        $232,329
                                                                    ========        ========

                                     See accompanying notes.
</TABLE>






















                                     - 3 -
<PAGE>
                          VALUE PROPERTY TRUST                          FORM 10Q
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS (Unaudited)
(In Thousands Except Per Share Data)
------------------------------------------------------------------------------------------------

                                                                       Three Months Ended
                                                                           December 31,
                                                                  ------------------------------
                                                                      1995             1994
                                                                  -------------    -------------
                                                                    (Post-      |     (Pre-
                                                                  Confirmation) |  Confirmation)
<S>                                                                 <C>             <C>     
Income:                                                                         |
   Income on rental properties:                                                 |
         Rental income .....................................        $  6,560    |   $  5,692
         Operating expense reimbursements ..................             843    |        577
   Interest and fee income on mortgage loans ...............           1,679    |      2,878
   Interest on short-term investments ......................             305    |        822
   Other ...................................................               8    |         33
                                                                    --------    |   --------
                                                                       9,395    |     10,002
                                                                                |
Expenses:                                                                       |
   Interest ................................................           3,565    |      9,559
   Expenses of rental properties:                                               |
         Depreciation and amortization .....................             564    |      1,704
         Operating .........................................           3,076    |      2,670
   Administrative ..........................................             753    |      1,153
                                                                    --------    |   --------
                                                                       7,958    |     15,086
                                                                                |
Income (loss) from operations before                                            |
  reorganization expenses ..................................           1,437    |     (5,084)
Reorganization expenses ....................................            --      |        370
                                                                    --------    |   --------
Net income (loss) ..........................................        $  1,437    |   $ (5,454)
                                                                    ========    |   ========
Per share:                                                                      |
                                                                                |
Net income .................................................        $    .13    |   $      *
                                                                    ========    |   ========
                                                                                |
Weighted average number of common shares outstanding .......          11,226    |     11,226
                                                                    ========    |   ========
                                                                                
*Per share information is not meaningful due to Fresh Start Reporting.            
                                                                                
                                     See accompanying notes.
</TABLE>






                                     - 4 -
<PAGE>
                          VALUE PROPERTY TRUST                          FORM 10Q
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS (Unaudited)
(In Thousands)
------------------------------------------------------------------------------------------------------
                                                                            Three Months Ended
                                                                                December 31,
                                                                       -------------------------------
                                                                            1995             1994
                                                                          --------         --------
<S>                                                                       <C>              <C>      
Cash flows from operating activities:
     Net income (loss) ...........................................        $  1,437         $ (5,454)
     Adjustments to reconcile net income (loss) to net
         cash provided by operating activities:
           Deprecation and amortization on real estate ...........             564            1,704
           Decrease in payables and accrued expenses .............            (785)            (231)
           Increase in interest payable ..........................           3,127            9,139
           Decrease (increase) in receivables and other assets ...           2,006              (15)
                                                                          --------         --------
     Total adjustments ...........................................           4,912           10,597
                                                                          --------         --------
Net cash provided by operating activities ........................           6,349            5,143
                                                                          --------         --------
Cash flows from investing activities: 
     Investment in real estate:
         Real estate equities ....................................          (1,445)          (4,936)
         Advances on mortgage loans ..............................             (67)             (79)
         Partnerships ............................................             (49)          (1,749)
     Principal repayments on mortgage loans ......................             100            1,362
     Sale of real estate .........................................           1,770            2,334
     Repayments on notes receivable ..............................             300               45
                                                                          --------         --------
Net cash provided by (used in) investing activities ..............             609           (3,023)
                                                                          --------         --------
Cash flows from financing activities:
     Decrease in mortgage payable ................................          (3,582)            --
     Decrease in restricted cash .................................           4,336             --
                                                                          --------         --------
Net cash provided by financing activities ........................             754            --
                                                                          --------         --------
Net increase in cash and cash equivalents ........................           7,712            2,120
Cash and cash equivalents at beginning of period .................           9,977           60,332
                                                                          --------         --------
Cash and cash equivalents at end of period .......................        $ 17,689         $ 62,452
                                                                          ========         ========
Supplemental schedule of non-cash investment and
     financing activities:
         Charge offs against allowance for losses ................        $   --           $  2,634
                                                                          ========         ========
         Transfer of mortgage loans to real estate owned .........        $  5,120         $   --
                                                                          ========         ========
         Transfer of mortgage loans to investments
            in partnerships ......................................        $   --           $ 15,443
                                                                          ========         ========
                                       See accompanying notes.
</TABLE>
                                     - 5 -
<PAGE>
                                    VALUE PROPERTY TRUST                FORM 10Q
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
STATEMENT OF SHAREHOLDERS' EQUITY (Unaudited)
(In Thousands)
-----------------------------------------------------------------------------------------------------------------------

For the Three Months Ended December 31, 1995


                                                                            Additional                        Total    
                                                 Common Shares               Paid-In        Retained      Shareholders'
                                             Shares          Amount          Capital        Earnings         Equity    
                                            --------        --------        --------        --------        --------   
<S>                                           <C>           <C>             <C>             <C>             <C>        
Balance at September 30, 1995 .......         11,226        $ 11,226        $ 88,848        $   --          $100,074   
                                                                                                                       
Net income ..........................           --              --              --             1,437           1,437   
                                              ------        --------        --------        --------        --------   
                                                                                                                       
Balance at December 31, 1995 ........         11,226        $ 11,226        $ 88,848        $  1,437        $101,511   
                                              ======        ========        ========        ========        ========   
                                            









                                                 See accompanying notes.
</TABLE>























                                     - 6 -
<PAGE>
                          VALUE PROPERTY TRUST                          FORM 10Q


                       NOTES TO THE FINANCIAL STATEMENTS

NOTE 1.  BASIS OF FINANCIAL INFORMATION AND PLAN OF REORGANIZATION

         In connection  with its emergence  from the Chapter 11 proceeding  (the
         "1995  Restructuring"),  the Trust implemented Fresh Start Reporting as
         of  September  30,  1995,  as set forth in The  American  Institute  of
         Certified  Public  Accountants  Statements of Position  ("Statement  of
         Position") on Financial  Reporting by Entities in Reorganization  Under
         the Bankruptcy Code 90-7.  Fresh Start  Reporting was required  because
         (1) the  reorganization  value of the Trust's assets immediately before
         the date of confirmation  was less than the total of all  post-petition
         liabilities,  (2) there was more than a 50% change in the  ownership of
         the  Trust,  and (3)  there was a  permanent  and  substantive  loss of
         control  by  existing  shareholders.   As  a  result,  all  assets  and
         liabilities  were restated to reflect their  respective  reorganization
         values or fair value.  The December 31, 1995 income  statement  amounts
         have  been  segregated  by a black  line in order to  signify  that the
         fiscal 1996 income  statement is that of a new reporting entity and has
         been prepared on a basis not comparable to the pre-confirmation  income
         statement.

         The accompanying  unaudited financial  statements have been prepared in
         accordance with generally  accepted  accounting  principles for interim
         financial  information  and  with  the  instructions  to Form  10-Q and
         Article 10 of Regulation S-X. Accordingly,  they do not include all the
         information  and footnotes  required by generally  accepted  accounting
         principles  for  complete  financial  statements.  In  the  opinion  of
         management,  all  adjustments,  consisting  of  only  normal  recurring
         accruals,  considered  necessary  for a  fair  presentation  have  been
         included.  Operating results for the three-month  period ended December
         31, 1995 are not  necessarily  indicative  of the  results  that may be
         expected for the year ending September 30, 1996.


NOTE 2.  SIGNIFICANT ACCOUNTING POLICIES

         Use of  Estimates  in the  Preparation  of  Financial  Statements - 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.

         Income  Taxes - The Trust is a real estate  investment  trust  ("REIT")
         that has elected to be taxed  under  Sections  856-860 of the  Internal
         Revenue  Code  of  1986,  as  amended  (the  "Code").  Accordingly,  no
         provision has been made for income taxes in the financial statements.





                                     - 7 -
<PAGE>
         The Trust estimates it has a net operating loss ("NOL") carryforward of
         approximately  $157  million for tax  purposes at fiscal year end 1995.
         Beginning  with fiscal 1996, the NOL  carryforward  available to offset
         taxable income for future years will be approximately $82 million after
         the  recognition  for tax  purposes  of  Cancellation  of  Indebtedness
         ("COD") income of approximately $75 million.  The NOL carryforward will
         be subject to Code  Section  382 annual  limitations  on the use of the
         NOL. The Trust estimates this annual  limitation to be approximately $6
         million with any portion of the Section 382  limitation not used in any
         taxable year carried forward up to fifteen years.

         The Trust  entered  into an amended and  restated  indenture  (the "New
         Indenture") with Wilmington  Trust Company as trustee,  relative to the
         Trust's  11-1/8% Senior Secured Notes (the "Notes").  The New Indenture
         restricts the payment of  dividends,  other than such  declaration  and
         making of dividend  payments that the Trust deems necessary to preserve
         its status as a REIT, unless the consolidated net worth of the Trust at
         the time of such  payment and after giving  effect  thereto is at least
         $50  million;  provided,  however,  that  the  Trust  shall in no event
         declare or make any such dividend  payment or other  distribution  if a
         default under the New Indenture has occurred and is  continuing.  Under
         the Code, the Trust must distribute 95% of its "REIT taxable income" to
         its shareholders to continue to qualify as a REIT.

         Rental Income - Rental income is  recognized on a  straight-line  basis
         over the applicable term of the lease.

         Interest  Income - Interest  income on each loan is recorded as earned.
         Interest  income is not  recognized if, in the opinion of the Trustees,
         collection  is  doubtful.   The  Trust  generally  considers  loans  as
         delinquent if payment of interest and/or principal,  as required by the
         terms of the note,  is more than 60 days past due.  Accrual of interest
         income is generally terminated and foreclosure  proceedings are started
         if payment is more than 60 days past due.

         Loan Fee Income - Loan fees are recorded as income using the  "interest
         method."  Accordingly,  loan fees are  deferred  when  received and are
         recorded as income over the term of the loan in relation to outstanding
         loan balances.

         Allowance  for  Losses  -  With  the   implementation  of  Fresh  Start
         Reporting,  as of September 30, 1995, the allowance for loan losses was
         reset to zero.  Further  provisions  for losses on  mortgage  loans and
         related  investments  in  accordance  with  Statements  of  Position on
         Accounting Practices of Real Estate Investment Trusts 75-2 ("SOP 75-2")
         may be necessary if there is deterioration  in real estate markets,  or
         there is a significant increase in the Trust's cost of capital.

         Net  Income  Per Share - Net  income  per share is  computed  using the
         weighted  average  common  shares  outstanding  during the three months
         ended December 31, 1995. Per share information is not disclosed for any
         period ending prior to October 1, 1995 because such  information is not
         meaningful  due to the  implementation  of  Fresh  Start  Reporting  on
         September 30, 1995.




                                     - 8 -
<PAGE>
         Depreciation  and  Amortization -  Depreciation  and  amortization  are
         computed on the  straight-line  method over an estimated useful life of
         40 years for buildings  and three to five years for other  property and
         lease commissions.  Real estate held for investment is depreciated on a
         straight line method over the remaining life of the asset.

         Cash and Cash  Equivalents - Cash and cash  equivalents  and restricted
         cash include short-term  investments (high grade commercial paper) with
         original  maturities  not  exceeding  a  term  greater  than  90  days.
         Restricted  cash of $2,455,000 is restricted as to use under terms of a
         termination pay plan, and various escrow and lease agreements.

         Investments in Partnerships - Investments in partnerships represent the
         Trust's  investment  in real  estate  partnerships.  The  Trust  owns a
         majority   percentage  interest  in  these  partnerships  and  receives
         substantially   all  the  cash  flow.  The  Trust  accounts  for  these
         partnerships in a similar manner as real estate investments.

         Real Estate Owned - At September  30, 1995,  real estate owned and held
         for investment are carried at reorganization  value and are depreciated
         using the straight line method over their estimated useful lives.

         At September 30, 1994,  real estate owned and held for  investment  are
         carried  at  the  lower  of  cost  or  net  realizable  value  and  are
         depreciated  using the straight line method over their estimated useful
         lives.

         The estimated lives are as follows:                
                                                            
         Buildings                     40 years             
         Equipment                      5 years             
         Tenant Improvement            Term of related lease

         Real estate owned and held for sale are carried at net realizable value
         which   approximate   reorganization   value.   Such   assets  are  not
         depreciated.
         
NOTE 3.  MORTGAGE LOANS AND INVESTMENTS IN REAL ESTATE

         The  Trust's   mortgage  loan  portfolio   consists  of  loans  located
         principally in California (58%) and Pennsylvania  (24%) at December 31,
         1995.

         At December 31, 1995, the Trust had undisbursed commitments of $684,000
         on partially funded mortgage loans.













                                     - 9 -
<PAGE>
         The following table  summarizes the Trust's  investments in real estate
         owned at December 31, 1995. At September 30, 1995, as a result of Fresh
         Start Reporting,  all assets and liabilities of the Trust were restated
         to reflect their  respective  reorganization  values or fair value. The
         accumulated  depreciation  on real estate  owned was reset to zero as a
         result of Fresh Start Reporting.
<TABLE>
<CAPTION>
           Type of                   Number           Carrying        Accumulated          Book
          Property                of Properties        Amount        Depreciation          Value
          --------                -------------       --------       ------------          -----
<S>                                     <C>             <C>                <C>             <C>    
Real Estate Owned                       34              129,936            (481)           129,455
Investments in Partnerships              5               25,916             (83)            25,833
                                       ---             --------         --------         ---------
Total                                   39              155,852            (564)           155,288
                                       ===             ========         ========          ========
</TABLE>

NOTE 4.  BORROWINGS

         Mortgage  Payable - The  Trust  has  a  mortgage  loan  of  $13,953,000
         outstanding at December 31, 1995. The contractual interest rate on this
         loan at December  31, 1995 was 10.75%  (Prime + 2%,  floor of 8.5%) and
         the loan matures in December 1996.

         Senior Secured Notes - The Notes are secured obligations  (secured by a
         first priority lien on all of the Trust's  collateral)  governed by the
         New Indenture  between the Trust and Wilmington  Trust Co., as Trustee,
         dated as of the effective date of the Trust's reorganization (September
         29, 1995).  Interest on these Notes accrues at 11-1/8% per annum and is
         payable  semi-annually  in arrears on each June 30 and December 31. The
         Trust is not required to make mandatory  redemption payments or sinking
         fund  payments  other  than with  respect to Asset  Sale  Proceeds  (as
         defined in the New Indenture).  If at any time the aggregate  amount of
         Asset Sale Proceeds exceeds $10 million,  the Trust is required to make
         an offer to all  holders of Notes to  purchase  the  maximum  principal
         amount  of Notes  that,  together  with  accrued  and  unpaid  interest
         thereon,  may be purchased  with 80% of any such Asset Sale Proceeds or
         100% of net  cash  proceeds  of  Indebtedness  (as  defined  in the New
         Indenture) incurred as permitted under the New Indenture. The Trust has
         the  option to redeem the  Notes,  in whole or in part,  at 100% of the
         principal  amount plus accrued and unpaid  interest.  The New Indenture
         includes  affirmative  covenants,   negative  covenants  and  financial
         covenants.

         Certain of these  covenants pose  restrictions on the Trust in the form
         of: (1) required  deposit of all Asset Sale  Proceeds into a segregated
         account;  (2)  limitation  on  investments;  (3)  required  grant  of a
         collateral interest in any real estate or promissory notes,  underlying
         mortgage or underlying lease acquired through foreclosure or otherwise;
         (4)  restrictions  on the  ability to incur new debt and (5) payment of
         dividends except those the Trust deems necessary to preserve its status
         as a REIT  subject  to  certain  limitations  as  defined  in  the  New
         Indenture.  At December 31, 1995 the Trust was in  compliance  with all
         covenants under the New Indenture.


                                     - 10 -
<PAGE>
NOTE 5.  SHARE OPTION PLAN

         1995 Share Option Plan

         On October 2, 1995,  the Board of Trustees  adopted a 1995 Share Option
         Plan (the "1995 Plan") for trustees,  officers, employees and other key
         persons of the Trust,  subject to the  approval of the 1995 Plan by the
         Trust's   shareholders   at  the  Trust's   1996   Annual   Meeting  of
         Shareholders.

         The 1995 Plan  provides  for the grant of  options  to  purchase  up to
         870,000 Common Shares at not less than 100% of the fair market value of
         the  Common  Shares,  subject to  adjustment  for share  splits,  share
         dividends and similar events.  To the extent that awards under the 1995
         Plan do not vest or otherwise  revert to the Trust,  the Common  Shares
         represented by such awards may be the subject of subsequent awards.

         The 1995  Plan  provides  for the  grant  of  incentive  stock  options
         ("Incentive  Options")  which qualify under Section 422 of the Code and
         nonqualified  stock  options  ("non-Qualified  Options").   Holders  of
         options also receive dividend equivalent rights.





































                                     - 11 -
<PAGE>
                          VALUE PROPERTY TRUST                          FORM 10Q

Item 2.  Management's Discussion and Analysis of Financial Condition and 
         Results of Operations

         The following section includes a discussion and analysis of the results
         of operation  for the quarters  ended  December 31, 1995 and 1994.  The
         Trust has, for the past several years, reported significant net losses.
         As a result  of the 1995  Restructuring,  past  results  should  not be
         indicative  of  future   operating   performance.   Future  results  of
         operations  of the  Trust  will  not be  comparable  to the  historical
         operating performance.

         Results of  Operations - Quarter  Ended  December 31, 1995 vs.  Quarter
         Ended December 31, 1994 - Net income for the quarter ended December 31,
         1995  was  $1,437,000  or $.13  per  share  compared  to a net  loss of
         $5,454,000 for the quarter ended  December 31, 1994.  December 31, 1994
         per share information is not meaningful due to Fresh Start Reporting.

         Rental income increased  $868,000 to $6,560,000 in the quarter December
         31, 1995 from  $5,692,000  for the quarter ended  December 31, 1994. In
         addition  to  rental   income,   the  Trust   received   from   tenants
         reimbursement  of certain  operating  expenses  totaling  $843,000  and
         $577,000   for  the  quarters   ended   December  31,  1995  and  1994,
         respectively.  These  increases  were  primarily due to the addition of
         five  properties  foreclosed  upon from December 31, 1994 and partially
         offset by one property which was sold. The Trust owned 39 properties at
         December 31, 1995 compared to 35 properties at December 31, 1994.

         Interest  and fee income on  mortgage  loans  decreased  $1,199,000  to
         $1,679,000  for  the  quarter  ended  December  31,  1995  compared  to
         $2,878,000 for the quarter ended  December 31, 1994.  This decrease was
         due  primarily  to  approximately  $49,800,000  in  carrying  value  of
         mortgage  loans  foreclosed  upon  during  the year  and  approximately
         $20,900,000 in mortgage loan repayments.

         Interest on short-term investments was $305,000 in the first quarter of
         1996 compared to $822,000 in the first quarter of 1995. The decline was
         due to the  reduction  in cash  balances as a result of the $25 million
         advance  towards the minimum payment made on April 11, 1995 required to
         implement the 1995  Restructuring and an additional $46 million payment
         made on September 29, 1995.

         Interest  expense  decreased  $5,994,000 to $3,565,000  for the current
         quarter compared to $9,559,000 for the quarter ended December 31, 1994.
         This decrease was due  primarily to the  cancellation  of  indebtedness
         that occurred at the end of the fourth quarter of fiscal 1995.

         Depreciation and amortization on rental properties decreased $1,140,000
         to $564,000 for the quarter ended December 31, 1995 from $1,704,000 for
         the quarter  ended  December 31,  1994,  primarily as a result of Fresh
         Start Reporting.  Prior to Fresh Start Reporting, the Trust depreciated
         all  real  estate  investments.   At  September  30,  1995,  the  Trust
         segregated the real estate portfolio into two categories: Held for Sale
         and Held for Investment.  The Trust depreciates the Held for Investment
         category over the estimated useful lives of the assets.



                                     - 12 -
<PAGE>
         Operating   expenses  on  rental  properties   increased   $406,000  to
         $3,076,000 for the quarter ended December 31, 1995 from  $2,670,000 for
         the quarter ended December 31, 1994. This increase was primarily due to
         the addition of real estate foreclosed upon during the year.

         Administrative  expenses decreased $400,000 to $753,000 for the quarter
         ended  December 31, 1995 compared to  $1,153,000  for the quarter ended
         December  31,  1994.  This  decrease was due to a reduction in staffing
         levels and reduced insurance premiums.

         The 1995  Restructuring  was completed in the fourth  quarter of fiscal
         1995. Reorganization expenses related to the Chapter 11 filing and debt
         restructuring expenses were $370,000 for the quarter ended December 31,
         1994.  These  expenses  reflect   professional  fees  incurred  by  the
         representatives of the creditors, shareholders and the Trust.

         Liquidity and Capital Resources - Prior to its restructuring, the Trust
         faced  significant  liquidity  problems.  The  Trust  did not  generate
         sufficient  cash  flow  from  normal  operations  and was  not  able to
         liquidate  mortgage loans and real estate  investments in order to meet
         scheduled  amortization  on its  indebtedness.  As a result of the 1995
         Restructuring,  the Trust should no longer have the liquidity  problems
         that  it  faced  in  the  previous  years.  Cash  flow  from  operating
         activities   should  be   sufficient   to  meet  minimum  debt  service
         requirements.  In the near term, capital  expenditure needs will be met
         through  liquidation  of  existing  assets  and the cash  available  at
         December 31, 1995.  However,  the Trust's present liquidity,  cash flow
         from operating  activities and ability to liquidate  existing assets to
         meet its obligation can be adversely  impacted by a negative  change in
         the economy,  particularly  as those  changes may relate to real estate
         assets. The Trust may, in the future,  seek to raise additional capital
         through  the  issuance of equity  securities  and/or the  incurring  of
         additional  indebtedness for the purpose of meeting  additional capital
         expenditures or retiring or refinancing the Notes.

         The New  Indenture  restricts  the  payment  of  dividends,  other than
         dividend payments that the Trust deems necessary to preserve its status
         as a REIT,  unless the  Consolidated  Net Worth (as  defined in the New
         Indenture)  of the Trust is at least $50  million;  provided,  however,
         that the Trust may not make any dividend  payment if a Default or Event
         of  Default  (as  defined in the New  Indenture)  has  occurred  and is
         continuing.  Under the Code, the Trust must distribute 95% of its "REIT
         taxable income" to its shareholders to continue to qualify as a REIT.

         Taxable  income  required to be  distributed  will be less than taxable
         income  for  financial  reporting  purposes  under  generally  accepted
         accounting  principles  due to  differences  related  to  depreciation,
         utilization  of NOL  carryforward  (subject  to the  Code  Section  382
         limitations) and timing differences related to bad debt deductions.









                                     - 13 -
<PAGE>
                          FORM 10Q                          Value Property Trust

PART II: Other Information

Item 1.  Legal Proceedings

         A third party has alleged the  existence  of a purchase  contract  with
         respect to one of the Trust's properties which the Trust disputes. This
         dispute has lead to litigation.  However,  the Trust believes that this
         litigation,  when resolved,  will not have a material adverse effect on
         the  business,  financial  condition  or results of  operations  of the
         Trust.

Item 5.  Other Information

         1.  Consistent with the Trust's plan to evaluate each of its assets and
         to  assess  its  mortgage  loan  portfolio,   management  has  recently
         completed a thorough  review of the Trust's  mortgage  loan  portfolio.
         Following this review,  the Trustees  concluded that a bulk sale of the
         mortgage loan portfolio would be the most efficient  method to maximize
         the overall return to shareholders.

         The factors  influencing  the  decision  were:  1) a stable to slightly
         declining interest rate environment;  2) the continuing  moderate level
         of inflation;  3) stable to slightly increasing real estate values in a
         growing  number of  markets;  and 4) the  increased  likelihood  that a
         number of  existing  borrowers  may  refinance  their  loans with other
         lenders. These factors, taken together,  provided the basis under which
         management  concluded  that a bulk sale  transaction  would enhance the
         overall value of the mortgage portfolio.

         In  light of the  decision  to  conduct  a bulk  sale of  approximately
         $47,000,000  of  mortgage  loans,  the Trust has  engaged a broker with
         extensive  experience in  coordinating,  conducting and marketing these
         transactions.  Although significant interest is anticipated,  there can
         be no assurance that a sale will ultimately  occur. If a bulk sale were
         not to occur  management  will  re-examine  the mortgage loan portfolio
         loan-by-loan  relative to  retention  or sale on an  individual  basis.
         Under either scenario,  when the Asset Sale Proceeds from such mortgage
         loan sales  exceeds $10  million,  the Trust is required  under the New
         Indenture  to make an offer to  purchase  the Notes as  described  more
         fully in the Notes to the  Financial  Statements - Note 4.  Borrowings.
         Any net proceeds  available  after such offer would be available to the
         Trust,  and could be used for one or more purposes,  including  without
         limitation:  1) investment and general Trust purposes;  2) repayment of
         existing debt; 3) an odd lot and/or share  repurchase  program;  and 4)
         cash distribution to shareholders.











                                     - 14 -
<PAGE>
         2. At  December  31,  1995 the Trust  had  borrowings  consisting  of a
         mortgage payable in the amount of $13,953,000 and Notes in an aggregate
         principal amount of $109,975,000. The interest rate on these borrowings
         were Prime plus 2% and 11-1/8%,  respectively,  with maturity  dates of
         December  1996 and  September  2002,  respectively.  It is the  Trust's
         intention,  given existing  market  conditions and prevailing  interest
         rates,  to explore the  feasibility of refinancing  all or a portion of
         its existing  debt.  Indications  of interest  have been  received from
         numerous  funding  sources  which  lead the  Trust to  conclude  that a
         significant  reduction in its overall  funding cost can,  under certain
         conditions, be achieved. The Trust has received a letter of intent with
         respect to a  refinancing  transaction.  However,  although  there is a
         general  agreement in principal as to the terms and  conditions  of the
         proposed  refinancing,  a  number  of  important  issues  have not been
         resolved.  The proposed  refinancing would be subject to numerous terms
         and conditions not yet fully  negotiated,  including among other things
         negotiation and execution of definitive documentation and completion of
         satisfactory due diligence.

         3.  THE  LIQUIDITY  AND  CAPITAL   RESOURCES  SECTION  OF  MANAGEMENT'S
         DISCUSSION   AND  ANALYSIS  OF  FINANCIAL   CONDITION  AND  RESULTS  OF
         OPERATIONS AND THIS PART II MAY CONTAIN FORWARD-LOOKING  STATEMENTS. IN
         EACH CASE THERE MAY EXIST FACTORS  WHICH COULD CAUSE ACTUAL  RESULTS OR
         EVENTS TO DIFFER  MATERIALLY FROM THOSE ANTICIPATED IN SUCH STATEMENTS.
         THESE FACTORS  INCLUDE  THOSE SET FORTH UNDER THE RELEVANT  CAPTIONS IN
         THE REFERENCED SECTIONS OF THE 10-Q.
































                                     - 15 -
<PAGE>
                                   SIGNATURES


         Pursuant to the  requirements  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.



Value Property Trust




/s/George R. Zoffinger
---------------------------------------
George R. Zoffinger
President and Chief Executive Officer
(Principal Exexcutive Officer)



/s/Robert T. English
---------------------------------------
Robert T. English
Treasurer, Secretary and
Chief Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)


DATE:   October 17, 1996


























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