UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                  FORM 10-Q

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

              For the quarterly period ended September 30, 1998
                                      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 No. 1-13080

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

                                   Maryland 06-1391084
      (State or other jurisdiction of incorporation or organization) (IRS
                         Employer Identification No.)

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

                                (860) 246-1126
               (Issuer's Telephone Number, including area code)


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

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

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

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
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:


The number of Common Shares of Beneficial Interest  outstanding as of November
6, 1998 was 8,238,074.



<PAGE>

                            GROVE PROPERTY TRUST

                                  Form 10-Q
                                    Index

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

                                                                        Page

Part I:   Financial Information                                           3

Item 1:   Consolidated Financial Statements (unaudited)                   3

          Consolidated Balance Sheets as of September 30, 1998 and
          December 31, 1997                                               3

          Consolidated Statements of Income for the Three Months
          Ended September 30, 1998 and 1997                               4

          Consolidated Statements of Income for the Nine Months
          Ended September 30, 1998 and 1997                               5

          Consolidated Statements of Cash Flows for the Nine Months Ended
          September 30, 1998 and 1997                                     6

          Notes to Consolidated Financial Statements                      7
 
Item 2:   Management's Discussion and Analysis of Financial Condition and
          Results of Operations                                          13

Part II:  Other Information                                              18

Item 1:   Legal Proceedings                                              18

Item 2:   Change in Securities and Use of Proceeds                       18

Item 3:   Defaults upon Senior Securities                                18

Item 4:   Submission of Matters to a Vote of Security Holders            18

Item 5:   Other Information                                              18

Item 6:   Exhibits and Reports on Form 8-K                               18

Signatures                                                               19

Exhibit Index                                                           E-1






                                       2
<PAGE>



                             GROVE PROPERTY TRUST
                         CONSOLIDATED BALANCE SHEETS

                                      September 30, 1998 December 31, 1997
                                       (Unaudited)          (Audited)
                                                (In thousands)
                                ASSETS
Real estate assets:
   Land                                   $  28,402         $ 21,403
   Buildings and improvements               167,798          125,412
   Furniture, fixtures and equipment          1,919              952        
                                       ---------------   --------------
                                            198,119          147,767
   Less accumulated depreciation             (7,631)          (3,674)
                                       ---------------   --------------
     Net real estate assets                 190,488          144,093
Cash and cash equivalents                     2,950            1,466
Due from affiliates                             564              620
Deferred charges, net of accumulated
  amortization of $97 and $127, respectively    971              849
Other assets                                  3,039            1,122
                                       ---------------   --------------
  Total assets                            $ 198,012         $148,150
                                       ===============   ==============
                                      

                 LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Mortgage notes payable                 $  92,771         $  33,457
   Revolving credit facility                  9,600            15,601
   Other liabilities                          1,623             1,387
   Distributions payable                      1,923             1,436
   Security deposits                          2,485             2,026
   Due to affiliates                            209                49
                                       ---------------    -------------       
  Total liabilities                         108,611            53,956
Minority interests in consolidated 
  partnerships                                1,065             1,357
Minority interest in Operating  
  Partnership                                21,804            24,339
Shareholders' equity:
   Preferred shares, $.01 par value
     per share, 1,000,000 shares
     authorized; no shares issued
     or outstanding                              -                 -
   Common shares, $.01 par value per
     share, 34,000,000 shares authorized;
     8,458,754 and 8,453,829 shares
     issued and outstanding, respectively        84                84
   Additional paid-in capital                68,389            68,976
   Distributions in excess of earnings       (1,941)             (562)
                                       ---------------   --------------
  Total shareholders' equity                 66,532            68,498
                                       ---------------   --------------
  Total liabilities and shareholders'
    equity                                $ 198,012         $ 148,150
                                       ===============   ==============
                                       
See notes to consolidated financial statements.





                                       3
<PAGE>




                           GROVE PROPERTY TRUST
                     CONSOLIDATED STATEMENTS OF INCOME
                                (Unaudited)


                                               For the Three Months Ended
                                                      September 30,
                                                 1998             1997
                                                (In thousands, except per
                                                       share data)

Revenues:
    Rental income                                $ 9,252           $ 5,506
    Property management - affiliates                 108               162
    Other income                                      72                36
    Interest income                                   29                48
                                              -------------     ------------
        Total revenues                             9,461             5,752
                                              -------------     ------------

Expenses:
    Property operating and maintenance             3,060             1,777
    Real estate taxes                                945               600
    Interest expense                               1,666               955
    General and administrative                       443               263
    Depreciation and amortization                  1,614              1225
                                              -------------     ------------
        Total expenses                             7,728             4,820
                                              -------------     ------------

      Income before minority interests             1,733               932

      Minority interests in consolidated 
        partnerships                                  20                65
     
      Minority interest in Operating             
        Partnership                                  424               347
                                              -------------     ------------
      Net income                                $  1,289           $   520
                                              =============     ============
  
Net income per share - basic                    $   0.15           $  0.13
                                              =============     ============

Net income per share - assuming dilution        $   0.15           $  0.13
                                              =============     ============

Weighted average number of common shares          
  outstanding-basic                                8,477             3,954
Effect of warrants and stock options                   -                63
                                              -------------     ------------
Weighted average number of shares    
  outstanding-assuming dilution                    8,477             4,017
                                              =============     ============

See notes to consolidated financial statements.




                                       4
<PAGE>




                            GROVE PROPERTY TRUST
                       CONSOLIDATED INCOME STATEMENTS
                                 (Unaudited)

                                                  For the Nine Months Ended
                                                        September 30,
                                                   1998
                                                                 1997
                                          (In thousands, except per share data)
Revenues:
   Rental income                                 $ 25,130          $10,944
   Property management-affiliates                     341              380
   Other income                                       156              122
   Interest income                                     75               90
                                                 ------------     ------------
      Total revenues                               25,702           11,536
                                                 ------------     ------------

Expenses:
   Property operating and maintenance               8,600            3,741
   Real estate taxes                                2,561            1,143
   Related party management fees                        -               22
   Interest expense                                 4,056            1,732
   General and administrative                       1,242              610
   Depreciation and amortization                    4,094            2,380
                                                 ------------     ------------
      Total expenses                               20,553            9,628
                                                 ------------     ------------

         Income before minority interests and
           extraordinary expenses                   5,149            1,908
           
         Minority interests in consolidated
           partnerships                                58              114

         Minority interest in Operating
           Partnership                              1,303              658
                                                 ------------     ------------

         Income before extraordinary expenses       3,788            1,136

Extraordinary expenses related to debt
  refinancing, net of minority interests              838                -
                                                 ------------     ------------
            Net income                             $2,950           $1,136
                                                 ============     ============
                                           
Income before extraordinary expenses per        
  share-basic                                      $ 0.45           $ 0.37
Extraordinary expenses per share - basic             0.10                -
                                                 ------------     ------------
Net income per share - basic                       $ 0.35           $ 0.37
                                                 ============     ============

Income before extraordinary expenses per share    
  - assuming dilution                              $ 0.45           $ 0.37
Extraordinary expenses per share - assuming        
  dilution                                           0.10                -
                                                 ------------     ------------
Net income per share - assuming dilution           $ 0.35           $ 0.37
                                                 ============     ============

Weighted average number of common shares           
  outstanding - basic                               8,462            3,075
Effect of warrants and stock options                    6               12
                                                 ------------     ------------
Weighted average number of shares outstanding - 
  assuming dilution                                 8,468            3,087
                                                 ============     ============

See notes to consolidated financial statements.







                                       5
<PAGE>



                             GROVE PROPERTY TRUST
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (Unaudited)

                                                  For the Nine Months Ended
                                                        September 30,
                                                    1998             1997
                                                        (In thousands)
Operating Activities:
Net income                                        $ 2,950          $  1,136
Adjustments to reconcile net income to net
  cash provided by operating activities
      Depreciation and amortization                 4,094             2,380
      Extraordinary expenses related to debt   
        refinancing                                   838                 -
      Minority interests                            1,361               772
      Non-cash compensation expense                    90                90
      Imputed Interest - Mortgage                       -                20
Change in other assets                             (1,917)           (1,247)
Change in accounts payable, accrued expenses
  and other liabilities                               602               693
                                                ------------      ------------
Net cash provided by operating activities           8,018             3,844
                                                ------------      ------------
                                             
Investing activities:
   Purchase of OP Units and partnership
     interests                                     (2,751)           (8,333)
   Deferred charges                                   (23)           (1,076)
   Cash acquired on purchase of partnership
     interests                                         62             3,013
   Additions to real estate assets                (35,169)           (5,846)
                                                ------------      ------------
      Net cash used in investing activities       (37,881)          (12,242)
                                                ------------      ------------
                                         
Financing activities:
   Net proceeds from mortgage notes payable        63,000            26,209
   Net repayments of Revolving Credit Facility     (6,001)                -
   Proceeds from sale of common stock                   -            30,000
   Equity offering costs                              (63)           (2,476)
   Repayment of mortgage notes payable            (18,210)          (41,888)
   Borrowings from (loans to) affiliates, net         177              (758)
   Financing costs                                   (740)             (648)
   Prepayment penalty on debt refinancing            (669)                -
   Repurchase of stock                               (781)                -
   Dividends and distributions paid                (5,366)           (1,422)
                                                ------------      ------------
      Net cash provided by financing activities    31,347             9,017
                                                ------------      ------------
                                              
Net change in cash and cash equivalents             1,484               619
Cash and cash equivalents, beginning of period      1,466               539
                                                ------------      -----------
Cash and cash equivalents, end of period          $ 2,950          $  1,158
                                                ============      ===========
                                               
Supplemental Information:
   Cash paid for interest                         $ 3,739          $  1,928
   Net rental property acquired in connection 
     with debt assumed                            $15,042          $ 74,809
   Net rental properties contributed in         
     exchange for OP Units                        $    61          $ 19,829
   Excess of liabilities over assets assumed
     on acquisition of partnership interests      $    80          $  1,732

See notes to consolidated financial statements.



                                       6
<PAGE>



                             GROVE PROPERTY TRUST

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                              September 30, 1998

1. FORMATION AND DESCRIPTION OF THE COMPANY 

   Grove  Property  Trust  (the  "Company")  was  organized  in the  State  of
   Maryland on April 4, 1994 as a Real Estate  Investment Trust ("REIT").  The
   Company  currently  operates  fifty-nine  residential  communities and four
   retail  properties.  The residential  communities are generally  mid-priced
   multi-family communities that are located in New England.


2. ACQUISITIONS, CONSOLIDATION TRANSACTIONS, AND EQUITY OFFERINGS

   On March 14,  1997,  the Company  completed a series of  transactions  (the
   "Consolidation Transactions") that included the following:
 
      The  Company   formed   an   operating   partnership   (the   "Operating
      Partnership" or the "OP") to serve as the vehicle for the  consolidation
      of ownership and control of the Company's operations and assets.

      Pursuant to  an exchange  offer,  the  Operating  Partnership  purchased
      from   non-affiliated   limited  partners   substantially   all  of  the
      outstanding  partnership  interests of twenty properties,  including one
      retail  property  ("Property  Partnerships")  in exchange for  1,205,324
      partnership  units (the "Common  Units" or "OP Units") of the  Operating
      Partnership,  or,  in  certain  circumstances,  cash.  Common  Units are
      generally  exchangeable for the Company's Common Shares on a one-for-one
      basis.

      Immediately   prior   to   the   consummation   of   the   Consolidation
      Transactions,  the Company declared a stock dividend  aggregating 26,250
      Common  Shares and  concurrently  effected a  1.125-for-one  stock split
      (collectively the "Stock Split"),  thereby issuing on a pro rata basis a
      total of 95,102  additional  Common  Shares to the holders of the issued
      and   outstanding   Common  Shares  just  prior  to  the   Consolidation
      Transactions.  All amounts based on outstanding  Common Shares have been
      retroactively adjusted to reflect the Stock Split.

      The Company  issued  3,333,333  Common  Shares  to new equity  investors
      (the  "New   Equity   Investment")   in  exchange   for  $30.0   million
      (approximately $27.5 million after costs of issuance).

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

      In exchange for the above, the Grove Companies  received an aggregate of
      909,115 Common Units in the Operating  Partnership and a cash payment of
      $178,000  from the  Company,  and the Company  received  620,102  Common
      Units  in  the   Operating   Partnership.   Additionally,   the  Company
      contributed to the Operating  Partnership the net proceeds received from
      the New Equity  Investment in exchange for 3,333,333  additional  Common
      Units.

      In  connection  with   the  Consolidation  Transactions,  the  Operating
      Partnership entered into a three-year secured revolving  acquisition and
      working  capital  credit  facility of up to $25.0 million (the "Original
      Revolving  Credit  Facility") and a $15.1 million ten-year term mortgage
      loan (the "Mortgage Loan").


   On June 1,  1997,  the  Company  acquired  two  related  party  residential
   apartment  complexes  ("Four  Winds" and  "Brooksyde").  In  addition,  the
   Company  acquired an interest in Windsor  Arbor  Limited  Partnership,  the
   owner of River's Bend Apartment  ("Windsor  Arbor").  Upon  consummation of
   the  June  1,  1997  transactions,  the  Operating  Partnership  issued  an
   aggregate  of 420,183  Common  Units  valued at $10 per unit.  The  Company
   also assumed  mortgage  debt on Four Winds and  Brooksyde in the  aggregate
   remaining   principal   amount  of  $6.2   million.   To   complete   these
   transactions,   the  Company  borrowed  $1.8  million  under  the  Original
   Revolving Credit Facility.





                                       7
<PAGE>



   On  July  2,  1997,  the  Company   acquired  certain   condominium   units
   representing a portion of the condominium  units in the Greenfield  Village
   complex located in Rocky Hill,  Connecticut,  from an unrelated  party. The
   Company paid  approximately $4.3 million,  in the aggregate,  with proceeds
   from the Original Revolving Credit Facility for these units.

   On September 1, 1997, the Company  acquired two apartment  communities from
   related   parties,    Glastonbury   Center   Apartments   in   Glastonbury,
   Connecticut,   and  Summit  and  Birch  Hill   Apartments  in   Farmington,
   Connecticut.  The Operating  Partnership issued 325,836 Common Units valued
   at $10.50 per unit,  assumed  $9.8  million in debt and drew down  $750,000
   against the Original Revolving Credit Facility to acquire these properties.

   On  September  30,  1997,  the  Company  acquired  the  remaining   limited
   partnership  interests in Windsor Arbor for $4.9 million with proceeds from
   the Original Revolving Credit Facility.

   On October 31, 1997, the Company  purchased an apartment  community from an
   unrelated  party  in  Ellington,  Connecticut,  ("High  Meadow").  The $4.2
   million  purchase  price was paid utilizing  borrowings  under the Original
   Revolving Credit Facility.

   In  addition,  on  October  31,  1997,  the  Company  acquired  two  retail
   properties from related parties.  These  acquisitions,  Cornerblock and the
   Wharf  Building,  are  specialty  retail  properties  located in Edgartown,
   Massachusetts.  Upon  consummation  of the  Cornerblock  and Wharf Building
   transactions,  the  Operating  Partnership  issued an  aggregate of 143,334
   Common Units valued at $10.50 each.  To complete  these  transactions,  the
   Company borrowed  approximately  $7.0 million under the Original  Revolving
   Credit Facility.

   In  November  1997,  the Company  completed  the sale of  4,500,000  Common
   Shares ("the  November  1997  Offering").  The net  proceeds  from the sale
   after  underwriting  discounts  and other  costs were  approximately  $45.2
   million.  The Company used the  proceeds to pay off the Original  Revolving
   Credit Facility and certain  mortgage notes payable (see Notes 5 and 6) and
   for working capital purposes.

   On December 1, 1997,  the Company  acquired an apartment  community from an
   unrelated   party  in   Ellington,   Connecticut,   ("Pinney   Brook")  for
   approximately $950,000.  The purchase price was paid from working capital.

   On December 31, 1997, the Company  acquired four communities from unrelated
   parties for  approximately  $20.0 million.  The individual  communities are
   Briar Knoll,  Ribbon Mill,  Hilltop and Spring Hill Commons and are located
   respectively  in Manchester,  Vernon and Norwich,  Connecticut,  and Acton,
   Massachusetts.  The purchase price was paid utilizing  borrowings under the
   Original Revolving Credit Facility and cash on hand.

   On  January  23,  1998,  the  Company  purchased  an  apartment  community,
   Tanglewood  Apartments,  located in West  Warwick,  Rhode  Island,  from an
   unrelated  party.  The  purchase  price of  approximately  $7.0 million was
   paid utilizing borrowings under the Original Revolving Credit Facility.

   On April 1, 1998,  the Company  purchased a  specialty  retail  property in
   Freeport, Maine, and an apartment community in Agawam,  Massachusetts.  The
   retail  property  includes a 25,000  square foot complex and was  purchased
   for approximately $7.2 million.  The apartment  community includes 88 units
   and was purchased from an affiliate of the Company for  approximately  $3.3
   million.  These  acquisitions  were  financed  through the  assumption of a
   $3.9  million  first  mortgage  on the retail  property,  issuance of 5,818
   Common Units, and utilizing  borrowings under the Original Revolving Credit
   Facility.

   On June 1, 1998, the Company  acquired two  residential  properties in East
   Providence,  Rhode Island,  from an unrelated  party. The purchase price of
   $19.4 million was financed  with the  assumption of a $2.4 million loan and
   $17.0 million from the new long-term mortgage  financing  described in Note
   4.

   On August 7, 1998, the Company acquired an apartment  community  located in
   Sturbridge,  Massachusetts,  for approximately  $4.0 million.  The purchase
   price was  financed  with the  assumption  of a $2.4  million loan and $1.6
   million from the 1998 Credit Facility (as defined in Note 5).

   On August 28, 1998, the Company acquired an apartment  community located in
   East Haven,  Connecticut,  for  approximately  $4.5  million.  The purchase
   price was  financed  with the  assumption  of a $2.9  million loan and $1.6
   million from the 1998 Credit Facility.

   The  Company  intends  to  continue  to  operate  all of  its  multi-family
   communities and retail commercial properties as rental properties.



                                       8
<PAGE>



3. SIGNIFICANT ACCOUNTING POLICIES 

   Basis of Presentation

   The financial  statements are presented on a consolidated  basis.  Included
   in the  Company's  financial  statements  are the accounts of the Operating
   Partnership  and  various  property  partnerships.   Properties  are  owned
   either  directly  by the  Operating  Partnership  or are  owned by  various
   limited  partnerships  or  limited  liability  companies,  that in turn are
   substantially  (89% to 99%) or wholly owned by the  Operating  Partnership.
   All significant intercompany transactions are eliminated in consolidation.

   The  accompanying  interim  financial  statements have been prepared by the
   Company's  management  in accordance  with  generally  accepted  accounting
   principles for interim  financial  information and in conjunction  with the
   rules and  regulations of the Securities  and Exchange  Commission.  In the
   opinion of management,  the interim financial  statements  presented herein
   reflect  all  adjustments  of a normal  and  recurring  nature,  which  are
   necessary to fairly  state the interim  financial  statements.  The results
   of  operations  for the interim  period  ended  September  30, 1998 are not
   necessarily  indicative  of the results  that may be expected  for the year
   ending  December 31, 1998.  These  financial  statements  should be read in
   conjunction with the Company's audited  financial  statements and the notes
   thereto  included in the Company's  Annual Report on Form 10-K for the year
   ended  December 31, 1997.  Certain  amounts have been  reclassified  in the
   1997  financial  statements  in order  to  conform  to the  1998  financial
   statements.

   Use of Estimates

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

   Cash and Cash Equivalents

   The Company  considers all highly liquid debt  instruments  from  financial
   institutions  with an original maturity of three months or less at the time
   of purchase to be cash  equivalents.  The combined account balances at each
   financial institution  periodically exceed the Federal Depository Insurance
   Corporation  ("FDIC")  insurance  coverage  and,  as a  result,  there is a
   concentration  of credit  risk  related  to amounts on deposit in excess of
   FDIC  insurance  coverage.  The  Company  believes  that  the  risk  is not
   significant since its cash is on deposit with major financial institutions.

   Real Estate Asset Capitalization and Depreciation

   Acquisitions  are  recorded  in  accordance  with the  purchase  method  of
   accounting.   Expenditures   for  long-lived   replacement-type   items  in
   stabilized  properties,   such  as  appliances  and  floor  coverings,  are
   capitalized.   Furthermore,  expenditures  for  non-recurring  items  under
   $1,000  and for normal  tenant  turnover  expenses  (such as  cleaning  and
   painting)  and repairs and  maintenance  are  expensed  as  incurred.  With
   respect to redevelopment properties,  the Company generally capitalizes all
   redevelopment related costs incurred throughout the redevelopment stage.

   Depreciation is provided for building and land  improvements  and buildings
   using the  straight-line  method  over the  estimated  useful  lives of the
   assets (10 to 30 years).  Additionally,  furniture,  fixtures and equipment
   are  depreciated  using an  accelerated  method over the  estimated  useful
   lives of the assets (5 to 7 years).

   Long-Lived Assets

   Statement of Financial  Accounting  Standards No. 121,  Accounting  for the
   Impairment of Long-Lived  Assets and  Long-Lived  Assets to be Disposed of,
   requires  long-lived  assets to be reviewed for  impairment  when events or
   circumstances  indicate that an impairment might exist.  When an impairment
   indicator is present,  assets must be grouped at the lowest level for which
   there are  identifiable  cash flows.  If the sum of the  undiscounted  cash
   flows is less than the carrying  amounts of the assets,  an impairment loss
   must be recorded.  The  impairment  loss is measured by comparing  the fair
   value of the assets  with its  carrying  amount.  To date,  no losses  have
   been  recognized  and  management  believes that no  impairment  conditions
   exist.

   Per Share Data

   In 1997,  the Financial  Accounting  Standards  Board issued  Statement No.
   128,  Earnings  per Share  ("Statement  128").  Statement  128 replaced the
   calculation of primary and fully diluted  earnings per share with basic and
   diluted  earnings  per share.  Unlike  primary  earnings  per share,  basic
   earnings per share  excludes  the dilutive  effects of options and warrants
   (see Note 6).  Earnings per share,  assuming  dilution,  is very similar to
   fully  diluted  earnings per share.  All earnings per share amounts for all
   periods have been presented and restated to conform to Statement 128.


                                       9
<PAGE>



   Income  per  common  share  information  is based on the  weighted  average
   number of Common  Shares  outstanding  during each period.  On February 10,
   1997, the Board of Trust Managers of the Company  declared a stock dividend
   aggregating  26,250  Common  Shares and the  concurrent  effectuation  of a
   1.125-for-one  common stock  split.  All shares  outstanding  and per share
   amounts have been restated to reflect these changes in capital structure.

   Stock-Based Compensation

   The Company has adopted Financial  Accounting  Standard No. 123, Accounting
   for  Stock-Based  Compensation.  This statement  defines a fair value based
   method of accounting for employee stock  compensation  plans.  However,  it
   also allows an entity to continue  to measure  compensation  cost for those
   plans in accordance with Accounting  Principles Board (APB) Opinion No. 25,
   Accounting  for Stock Issued to Employees.  Under APB No. 25,  compensation
   cost is the excess,  if any, of the quoted market price of the stock at the
   grant  date over the  amount the  employee  must pay to acquire  the stock.
   The Company has  elected to  continue  to account  for its  employee  stock
   compensation plans under APB No. 25.

   Advertising

   The Company  expenses  advertising  costs as  incurred.  Advertising  costs
   were  $156,329 and $56,394 for the three months  ended  September  30, 1998
   and 1997,  respectively,  and  $395,899  and  $115,559  for the nine months
   ended September 30, 1998 and 1997, respectively.

   Deferred Charges

   Deferred charges,  consisting principally of loan costs, are amortized on a
   straight-line  basis  over the term of the  related  obligation.  When term
   loans are retired prior to maturity,  the  unamortized  deferred loan costs
   are written-off and reported as an extraordinary expense item.

   Revenue Recognition

   Rental income  attributable to leases is recorded when due from tenants and
   recognized monthly as it is earned,  which is not materially different than
   the  straight-line   basis.  The  Company  generally  requires  tenants  to
   provide a cash  security  deposit equal to one month's rent or pay the last
   month's  rent in advance.  Such  payments  are deferred and are included in
   security deposits on the accompanying consolidated balance sheets.

4. MORTGAGE NOTES PAYABLE

   On June 1, 1998,  the Company  obtained a $63.0 million  ten-year term loan
   with a  lender.  The  net  proceeds  of the  loan  were  used to  repay  an
   existing $15.0 million loan,  acquire two properties in East Providence for
   $17.0 million (see Note 2), pay down $27.0 million of the Revolving  Credit
   Facility  and the  remaining  amount  of  approximately  $3.0  million  was
   deposited  in  working  capital  reserves  or used for  transaction  costs.
   Payments of interest  only are due under the new $63.0  million  loan at an
   effective  fixed  interest rate of 6.71% and the loan matures in June 2008.
   As of September 30, 1998, the Company's  weighted  average interest rate on
   its long-term debt is 7.0% and its weighted average maturity is 10.1 years.

   As a result of the $15.0  million  loan  repayment  and  retirement  of the
   Original  Revolving Credit Facility (see Note 5), the Company incurred $0.2
   and $0.3  million,  respectively,  of expenses  related to the write-off of
   unamortized  finance costs. In addition,  the Company incurred $0.7 million
   of  expense  in  connection   with  the  breakage  of  certain  LIBOR  swap
   contracts.  Accordingly,  the  results of  operations  for the nine  months
   ended   September   30,  1998   reflect   approximately   $0.8  million  of
   extraordinary expenses (net of minority interests).

   Mortgage  notes payable  consist of the following at September 30, 1998 (in
   thousands):

    Amortizing   first   mortgage notes       $ 25,771
    Interest only first  mortgage notes         67,000
                                             ----------
                                              $ 92,771
                                             ==========

   The  amortizing  first  mortgage  notes have fixed  interest  rates between
   7.04% and 10.08%.  These notes  mature  between the years 2000 and 2031 and
   are  collateralized  by nine of the  properties  with a carrying  amount of
   approximately  $37.0  million as of September  30,  1998.  Certain of these
   notes  are  partially   guaranteed  by  certain   executive   officers  and
   shareholders of the Company.





                                       10
<PAGE>



   There  are  two  interest  only  first  mortgage notes.   One  note  has  a
   principal  balance   of  $4.0  million   requiring   monthly   payments  of
   interest only at a fixed rate of 7.00% and   matures  in  2007.  This  note
   is collateralized by one property with a carrying amount  of  approximately
   $6.3 million as of September  30,  1998.  The other note  has  a  principal
   balance  of $63.0 million  requiring  monthly  payments of interest  at  an
   effective fixed interest rate of 6.71% and  matures  in 2008.  This note is
   collateralized by  seventeen  properties with an aggregate-carrying  amount
   of approximately  $77.4 million as of September 30, 1998.

   Annual principal payments due as of September 30, 1998, are  as follows (in
   thousands):

                   Period Ending December 31,
                       1998        $  111
                       1999           372
                       2000           402
                       2001           436
                       2002           472
                       Thereafter  90,978
                                  ---------
                                  $92,771
                                  =========

5. REVOLVING CREDIT FACILITY

   In  March  1997,  the  Operating  Partnership  entered  into a  three  year
   revolving credit facility with a bank,  guaranteed by the Company for up to
   $25.0 million (i.e., the Original  Revolving Credit  Facility).  Borrowings
   under  the  Original  Revolving  Credit  Facility  were  collateralized  by
   thirteen  properties and interest was payable monthly at a floating rate of
   1.5% above the 30, 60, or 90-day LIBOR rate.

   In April  1998,  the  Operating  Partnership  entered  into a new  two-year
   Revolving  Credit  Facility (the "1998 Credit  Facility") with its bank and
   retired  the  Original  Revolving  Credit  Facility.  The new  1998  Credit
   Facility  increased  the  availability  of the credit line to $50.0 million
   from $25.0  million  and  converted  the line to an  unsecured  line from a
   secured line. The 1998 Credit  Facility bears interest  payable  monthly at
   a floating  rate of 1.5% above the 30, 60, or 90-day  LIBOR rate.  The 1998
   Credit  Facility is available to fund future property  acquisitions  and up
   to  $5.0  million  is  available  to  fund  working  capital  needs.  As of
   September 30, 1998, the 1998 Credit Facility had $9.6 million outstanding.

6. SHAREHOLDERS' EQUITY

   The  following  table  outlines the 1997 and 1998 activity in the Operating
   Partnership equity accounts:

                                                          Number of:
                                                                  Limited
                                                     Company's   Partners'
                                                     Operating   Operating
                                                    Partnership Partnership
                                                       Units       Units
    Outstanding at January 1, 1997                    620,102        -
    Consolidation Transactions in March 1997:            -           -
       New Equity Investment                        3,333,333        -
       Transfer of property interests-Grove       
         Companies                                       -        909,115
       Transfer of property interests-non- 
         affiliates                                      -      1,205,324
    June 1997 acquisitions                               -        420,183
    Proceeds from stock options in May 1997               394        -
    September 1997 acquisitions                          -        325,836
    October 1997 acquisitions                            -        143,334
    The November 1997 Offering                      4,500,000        -
    April 1998 acquisitions                              -          5,818
    OP Units redeemed April 1998 through September    
      1998                                               -       (213,264)
    OP Units exchanged July 1998 through September
      1998                                             25,722     (25,722)
    Common Shares repurchased by the Company 
      during September 1998                           (83,950)       -
    Executive stock grants - September 1998            63,153        -
                                                    ------------------------
    Outstanding at September 30, 1998               8,458,754   2,770,624
                                                    ========================
       Ownership Percentage                             75.3%       24.7%
                                                    ========================

    Income   is   allocated   to  the   Minority  Interest  in  the  Operating
    Partnership   based   on  its  weighted  average  ownership percentage  of
    the  Operating  Partnership.   The  ownership  percentage  is computed  by
    dividing  the  weighted  average  number  of   OP   Units   held   by  the
    Limited   Partners   ("Minority   Interest")   by   the   total   weighted
    average   OP   Units   outstanding.    Issuance   of   additional   Common
    Shares  in  connection   with   requested   redemptions  of  OP  Units  or


                                       11
<PAGE>



    redemption  of OP Units for cash changes the ownership  percentage of both
    the Minority Interest and the Company.  An OP Unit and a Common Share have
    essentially the same economic characteristics  as they  effectively  share
    equally  in  the  net  income  or  loss  and distributions of the  OP.  OP
    Units generally  may be  redeemed  for  cash or, at the  election  of  the
    Company,  for  Common Shares on a  one-for-one  basis  subject  to certain
    adjustment provisions.

    As  of  September 30, 1998, Common  Shares have been  reserved  for future
    issuance as follows:

             OP Units not owned by the Company (see above)  2,770,624
             Underwriters warrants                             47,248
             Stock options issued                             977,723
             Additional stock options issuable                590,003
                                                           -----------
                                                            4,385,598
                                                           ===========

   At  the  Company's   annual   meeting  on  June  30,  1998,  the  Company's
   shareholders  approved an increase  in the number of  authorized  preferred
   and common shares from 1,000 and  13,999,000  to 1,000,000 and  34,000,000,
   respectively.

   During 1998,  the Board of Directors  authorized  management to purchase up
   to 400,000 Common  Shares.  Purchases are being made in the open market and
   are being funded from  operating  cash flow and the  Company's  1998 Credit
   Facility.  As of  September  30, 1998, the Company  has repurchased  83,950
   shares at an average price of $9.65 per share.

7. SUBSEQUENT EVENTS

   On October 30, 1998, the Company acquired seventeen residential  properties
   in the greater Boston suburbs from an unrelated  party.  The purchase price
   of  approximately  $73  million was  financed  with the  assumption  of $51
   million in mortgage  loans,  $15 million from the 1998 Credit  Facility and
   the  issuance of an  aggregate  of  approximately  1,000,000  Common  Units
   valued at $9.82  per unit  including  approximately  200,000  Common  Units
   issued to a wholly owned subsidiary of the Company.

   On November 5, 1998,  the Company  guaranteed  an $8.2 million bank loan to
   certain  officers of the Company to be used by officers to purchase  Common
   Shares.  In addition,  the Company  authorized  390,000 Common Shares to be
   issued to such  officers  at $10.25 per share (the  closing  share price on
   November 4, 1998).  The officers will use  approximately  $4.0 million from
   the $8.2  million  bank loan to purchase  the 390,000  Common  Shares to be
   issued.

   Between  October 1, 1998 to November  11,  1998,  the  Company  repurchased
   220,680 additional shares at an average price of $9.84 per share.




                                       12
<PAGE>



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

Overview

The results of  operations  for the three and nine months ended  September 30,
1997   included  28   residential   communities   and  one  retail   property,
respectively.  The results of  operations  for the three and nine months ended
September  30,  1998  included  41  residential  communities  and four  retail
properties,   respectively.   (See  Note  2  to  the  consolidated   financial
statements for details).

The following  discussion  should be read in conjunction with the consolidated
financial statements and notes thereto included elsewhere in this report.

Results of Operations

Results of operations  of the Company for the nine months ended  September 30,
1998 and 1997.

Total revenues  increased  $14,166,000 from $11,536,000 to $25,702,000  during
the nine months ended  September  30, 1998,  as compared to the  corresponding
period  in 1997.  The  increase  is  primarily  due to the  operations  of the
properties  acquired  during the period from March 14, 1997 to  September  30,
1998 (the "Recent  Acquisitions").  (See Note 2 to the consolidated  financial
statements for details.)

Property   operating   and   maintenance  expense  increased  $4,859,000  from
$3,741,000 to $8,600,000  during the nine months ended September 30,  1998, as
compared to the corresponding period in 1997.  The  increase is primarily  due
to the  operations of the Recent Acquisitions.

Real   estate   taxes   increased $1,418,000   from  $1,143,000  to $2,561,000
during  the  nine  months  ended  September  30,  1998,  as  compared  to  the
corresponding period in 1997.  The  increase is due primarily  to  the  Recent
Acquisitions.  Related party management fees decreased from $22,000   to  zero
due to the acquisition  by  the  Company  of the management  services division
of Grove  Property Services  Limited  Partnership  ("GPS")  as  part  of   the
Consolidation Transactions in March 1997.

Interest    expense   increased  $2,324,000   from  $1,732,000  to  $4,056,000
during   the   nine  months  ended  September 30, 1998,  as  compared  to  the
corresponding period in 1997.  The increase is primarily due to the assumption
of mortgage debt and new debt related to the Recent Acquisitions.

General    and    administrative expenses  increased $632,000 from $610,000 to
$1,242,000   during the nine months  ended  September 30,  1998,  as  compared
to  the  corresponding   period  in  1997.  This  increase  is  primarily  due
to the increased costs associated with  the  change  in size and structure  of
the Company.

Depreciation   and   amortization  increased  $1,714,000  from  $2,380,000  to
$4,094,000 during the six months ended September 30, 1998, as compared  to the
corresponding   period  in  1997.  This  increase  is related  to  the  Recent
Acquisitions.

The   Company's   income   before extraordinary  expenses increased $2,652,000
from $1,136,000 to $3,788,000 during the nine months ended September 30, 1998,
as compared to the corresponding period in 1997. The increase in income before
extraordinary expenses is primarily  due to the operations   of   the   Recent
Acquisitions.

In June 1998, the Company  refinanced  certain of its debt. In connection with
the refinancing,  the Company wrote-off related unamortized deferred financing
costs and incurred  prepayment  penalties and related costs.  These costs were
charged to operations and are reflected as  extraordinary  expenses related to
debt refinancing, net of minority interests.

Results of operations of the Company for the three months ended  September 30,
1998 and 1997.

Total revenues  increased  $3,709,000 from $5,752,000 to $9,461,000 during the
three months ended September 30, 1998, as compared to the corresponding period
in 1997.  The  increase  is  primarily  due to the  operations  of the  Recent
Acquisitions.

Property  operating  and  maintenance   expenses  increased   $1,283,000  from
$1,777,000 to $3,060,000  during the three months ended September 30, 1998, as
compared to the corresponding period in 1997. The increase is primarily due to
additional expenses related to the Recent Acquisitions.

Real estate taxes  increased  $345,000  from  $600,000 to $945,000  during the
three months ended September 30, 1998, as compared to the corresponding period
in 1997. This increase is related to the Recent Acquisitions.


                                       13
<PAGE>



Interest  expense  increased  $711,000 from $955,000 to $1,666,000  during the
three months ended September 30, 1998, as compared to the corresponding period
in 1997.  The increase is primarily due to the assumption of mortgage debt and
new debt related to the Recent Acquisitions.

General  and  administrative  expenses  increased  $180,000  from  $263,000 to
$443,000  during the three months ended September 30, 1998, as compared to the
corresponding  period in 1997. This increase is primarily due to the increased
costs associated with the change in size of the Company.

Depreciation and amortization increased $389,000 from $1,225,000 to $1,614,000
during  the  three  months  ended  September 30,  1998,  as  compared  to  the
corresponding  period  in  1997.  The increase is primarily  due to additional
depreciation related to the Recent Acquisitions.

The Company's net income increased $769,000 from $520,000 to $1,289,000 during
the three months ended  September 30, 1998, as compared  to the  corresponding
period in 1997.  The increase is primarily due to the operations of the Recent
Acquisitions.

Same Community Analysis

For the nine months ended September 30, 1998 and 1997.

The  27  apartment  communities  (2,564  apartments)  owned  by  Grove  or its
affiliated  predecessors  since  the  beginning  of  1996,  a "Same Community"
comparison, experienced an increase in   average  monthly rental rates, offset
by a small decrease   in  average   economic occupancy  and   experienced   an
increase in   net operating income.  On  a  Same Community basis, the weighted
average monthly rental rate per apartment increased 3.6% to $728 from $703 and
the  economic  occupancy rate decreased to 95.8% from 96.5% for the first nine
months of 1998 as compared to  the  first  nine months  of 1997, respectively.
Overall, Same Community  net operating  income increased 7.0% to $9.64 million
from $9.01 million for the first nine months of 1998 as compared to the  first
nine months of 1997.  Net operating income  increased  due  to a 2.9% increase
in  revenues  and  2.5% decrease in  operating  expenses.  Revenues  increased
due to the increase  in    rental  rates partially  offset  by  a  decrease in
occupancy.  Expenses decreased   primarily  due  to  a decrease  in   payroll,
utility  costs   and  snow   plowing  as  a  result  of  the  unusually   mild
weather  experienced  in  the  first  quarter  of  1998.  The  following table
summarizes Same Community operations:

                                        ------------------
                                        Nine Months Ended
                                          September 30,
                                        ------------------      %
                                          1998     1997       Change
                                          ----     ----       ------
Economic Occupancy                        95.8%    96.5%      -0.7%
                                       ==================
Average monthly rental rate per unit     $ 728    $ 703        3.6%
                                       ==================
Revenues (millions)                      $16.22   $15.76       2.9%
Operating expenses (millions)              6.58     6.75      -2.5%
                                       ------------------    -------
    Net operating income (millions)      $ 9.64   $ 9.01       7.0%
                                       ==================    =======

For the three months ended September 30, 1998 and 1997.

The  27  apartment  communities  (2,564  apartments)  owned  by  Grove  or its
affiliated  predecessors  since  the  beginning  of 1996,  a "Same  Community"
comparison,  experienced an increase in average  monthly rental rates,  offset
by an  increase  in  operating  expenses  and  experienced  an increase in net
operating  income.  On a Same Community  basis,  the weighted  average monthly
rental rate per  apartment  increased  3.3% to $734 from $711 and the economic
occupancy  rate  was  unchanged  at 96.5%  for the  third  quarter  of 1998 as
compared to the third quarter of 1997.  Overall,  Same Community net operating
income  increased  5.0% to $3.39  million  from  $3.23  million  for the third
quarter  of 1998 as  compared  to the third  quarter  of 1997.  Net  operating
income  increased  due to a 3.5%  increase in revenues  partially  offset by a
1.0% increase in operating  expenses.  Revenues  increased due to the increase
in  rental  rates.  Expenses  increased  primarily  due to  increases  in gas,
landscaping,  marketing  and  advertising  which were offset by  decreases  in
payroll.  The following table summarizes Same Community operations:




                                       14
<PAGE>



                                        ------------------
                                           Quarter Ended
                                           September 30,
                                        ------------------      %
                                          1998     1997      Change
                                          ----     ----      ------
Economic Occupancy                        96.5%    96.5%      0.0%
                                        ==================
Average monthly rental rate per unit     $ 734    $ 711       3.3%
                                        ==================
Revenues (millions)                      $5.50    $5.31       3.5%
Operating expenses (millions)             2.11     2.09       1.0%
                                        ------------------   -------
    Net operating income (millions)      $3.39    $3.23       5.0%
                                        ==================   =======

Liquidity and Capital Resources

Cash and cash  equivalents  totaled  $2,950,000 as of September 30, 1998.  The
Company's  ratio of  long-term  debt,  including  the 1998 Credit  Facility to
total market  capitalization  on  September  30, 1998 was 47.7% based on total
market  capitalization of $214.66 million based on 11,229,378 Common Units and
Common  Shares  valued  at  $10.00  per  share/unit   (the  closing  price  on
September 30,  1998) plus $102.37  million of long-term  debt,  including  the
1998 Credit Facility.

Cash  provided by  operating  activities  was  $8,018,000  for the nine months
ended  September 30, 1998.  Cash used in investing  activities was $37,881,000
for the nine months ended  September 30, 1998.  Net cash provided by financing
activities was $31,347,000 for the nine months ended September 30, 1998.

On  September  15, 1998,  the Company  declared a dividend of $0.17 per share,
which was paid on October 16, 1998. The dividends  declared  during the period
resulted  in a 59.1% pay out of funds  from  operations  for the three  months
ended September 30, 1998.

On September 15, 1998, the Operating  Partnership  declared a distribution  of
$0.17  per  Common  Unit to the  limited  partners  of the OP that was paid on
October 16, 1998.

In April  1998,  the  Operating  Partnership  entered  into  the  1998  Credit
Facility  with its bank and retired the Original  Revolving  Credit  Facility.
The 1998 Credit  Facility  increased  the  availability  of the credit line to
$50.0 million from $25.0  million and converted the line to an unsecured  line
from a secured line. The 1998 Credit  Facility bears interest  payable monthly
at a floating  rate of 1.5% above the 30, 60, or 90-day  LIBOR rate.  The 1998
Credit  Facility is available to fund future property  acquisitions  and up to
$5.0 million is available to fund working  capital needs.  As of September 30,
1998,  borrowings  of $9.6  million  were  outstanding  under the 1998  Credit
Facility.

During 1998,  the Board of Directors  authorized  management to purchase up to
400,000  Common  Shares.  Purchases  are being made in the open market and are
being funded from operating cash flow and the Company's 1998 Credit  Facility.
As of September  30, 1998,  the Company has  repurchased  83,950  shares at an
average price of $9.65 per share.

The Company  intends to meet its  short-term  liquidity  requirements  through
cash  flow  provided  by  operations  and  borrowings  under  the 1998  Credit
Facility.  The Company  considers  its ability to generate cash to be adequate
and expects it to continue to be adequate to meet operating  requirements  and
pay shareholder  dividends in accordance with REIT  requirements.  The Company
may  use  other  sources  of  capital  to  finance   additional   acquisitions
including,  but not limited to, the selling of additional  equity interests in
the  Company,  non-distributed  Funds From  Operations,  the  issuance of debt
securities,  funds  from the  1998  Credit  Facility,  and  exchanging  Common
Shares or Common Units for properties or interests in properties.

Year 2000

In the course of the Company's  planned upgrade of its information  systems to
accommodate  growth  of  its  business,  the  Company  will  assure  that  its
computer  software  and  hardware  will be year 2000  compliant.  The  Company
anticipates  that the upgrade of its  information  systems  will be  completed
during  1998 and  1999 and  believes  that  the cost  thereof  will not have a
material impact on net income,  assets or  liabilities.  The Company has begun
to identify the other  non-information  systems that depend on microprocessors
in the  conduct  of its  business.  Because  of the  nature  of the  Company's
business,   it  does  not  depend  to  any  material   extent  on   electronic
interchange of data or information with its residents, suppliers or vendors.




                                       15
<PAGE>




-------------------------------------------------------------------------------
             Assessment       Remediation        Testing      Implementation
-------------------------------------------------------------------------------

Information 100% Complete  50% Complete       40% Complete    50% Complete
Technology
                           Expected           Expected        Expected
                           completion date,   completion      completion
                           October 1999       date, October   date, October
                                              1999            1999
-------------------------------------------------------------------------------

Equipment   100% Complete  50% Complete       0% Complete     0% Complete
with
Embedded                   Expected           Expected        Expected
Chips or                   completion date,   completion      completion
Software                   September 1999     date,           date,
                                              September 1999  September 1999
-------------------------------------------------------------------------------

Products    100% Complete  100% Complete      100% Complete   75% Complete

                                                              Expected
                                                              completion
                                                              date,
                                                              September 1999
-------------------------------------------------------------------------------

3rd Party   Expected       0% Complete        0% Complete     0% Complete
            completion
            date for
            surveying
            all third
            parties,
            March 1999
-------------------------------------------------------------------------------

Funds from Operations

Industry  analysts   generally  consider  funds  from  operations  ("FFO")  an
appropriate  measure  of  performance  of an equity  REIT.  FFO is  defined as
income before gains (losses) on investments and extraordinary  items (computed
in accordance with generally accepted accounting  principles) plus real estate
depreciation,  less preferred  dividends and after  adjustment for significant
non-recurring  items, if any. This definition  conforms to the recommendations
set forth in a White Paper adopted by the National  Association of Real Estate
Investment  Trusts  ("NAREIT")  in early 1995.  The Company  believes  that in
order to  facilitate  a clear  understanding  of its  operating  results,  FFO
should be  examined in  conjunction  with the net income as  presented  in the
financial  statements and information  included  elsewhere in this Report. FFO
does not represent  cash  generated  from  operating  activities in accordance
with  generally  accepted   accounting   principles  and  is  not  necessarily
indicative  of  cash  available  to  fund  cash  needs.   FFO  should  not  be
considered as an  alternative  to net income as an indication of the Company's
performance or as an alternative to cash flow as a measure of liquidity.

FFO  increased  from $1.8  million to $3.2  million for the three months ended
September 30, 1998 from the three months ended  September 30, 1997.  Dividends
declared for the three months ended  September  30, 1998 were $0.17 per share,
representing  59.1% of FFO,  while  dividends  declared  for the three  months
ended September 30, 1997 were $0.1575 per share representing 56.7% of FFO.

FFO was calculated as follows (in thousands):
                                   For the Three       For the Nine Months
                                   Months Ended               Ended
                                   September 30,          September 30,
                                  1998      1997          1998      1997
                                  ----      ----          ----      ----
Income before minority interests
  and extraordinary items        $1,733      $932       $5,149     $1,908
Real estate depreciation and
  amortization                    1,538     1,079        3,928      2,059
Non-recurring expenses                -        -             -         69
                                --------------------   ---------------------
Funds from operations before      
  minority interests              3,271     2,011        9,077      4,080
Minority interests in              
  consolidated partnerships          32       180           95        286
                                --------------------   ---------------------
FFO                               $3,239    $1,831       $8,982    $3,750
                                ====================   =====================

Seasonally

Historically,  net income from the  Properties has been lower in the first and
second  quarters  than in the  remainder  of the  year due to  higher  utility
charges,  snow  removal  and  other  weather-related  expenses.  In  addition,
rental rates  increase  ratably during the year which results in higher rental
revenues in the second half of the year.





                                       16
<PAGE>



Inflation

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

Acquisitions/Dispositions

The Company  continuously  evaluates  properties  for possible  acquisition or
disposition.  Individual  properties may be acquired  through direct  purchase
of the  property or through the  purchase of the entity  owning such  property
and may be made  for  cash  or  securities  of the  Company  or the  Operating
Partnership.  In  connection  with any  acquisition,  the  Company  may  incur
additional   indebtedness.   If  the  Company  acquires  or  disposes  of  any
property,  such acquisition or disposition could have a significant  effect on
the Company's financial condition, results of operations or cash flows.

Recent Developments

On October 30, 1998, the Company acquired seventeen residential  properties in
the greater  Boston  suburbs from an unrelated  party.  The purchase  price of
approximately  $73 million was financed with the  assumption of $51 million in
mortgage loans,  $15 million from the 1998 Credit Facility and the issuance of
an aggregate of approximately  1,000,000 Common Units valued at $9.82 per unit
including  approximately  200,000  Common  Units  issued  to  a  wholly  owned
subsidiary of the Company.

In November 1998, the Company's  Board of Trust Managers and its  Compensation
Committee approved changes in the compensation  arrangements for the Company's
executive  officers.  These changes included approval of payments to executive
officers  to  facilitate  the  acquisition  of Common  Shares  by them,  which
amounts,  as approved,  would aggregate  approximately  $5.0 million,  plus an
amount  sufficient to pay such executive  officers  related  federal and state
income  taxes,  payable  over a period of 36 months.  However,  the amount and
timing of any such  payments  is subject  to  adjustment  by the  Compensation
Committee  depending  on  future  developments  including  future  results  of
operations.

On  November 5, 1998,  the Company  guaranteed  an $8.2  million  bank loan to
certain  officers of the  Company to be used by  officers  to purchase  Common
Shares. In addition, the Company authorized 390,000 Common Shares to be issued
to such  officers at $10.25 per share (the closing  share price on November 4,
1998). The officers will use approximately  $4.0 million from the $8.2 million
bank loan to purchase the 390,000 Common Shares to be issued.

Between October 1, 1998 to November 11, 1998, the Company  repurchased 220,680
additional shares at an average price of $9.84 per share.

"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1996

Certain  statements  contained  in  this  report,  and in  particular  in this
"Management's  Discussion  and Analysis of Financial  Condition and Results of
Operations,"  statements  in other  filings with the  Securities  and Exchange
Commission  and  statements  in other  public  documents of the Company may be
forward  looking  and are  subject  to a variety  of risks and  uncertainties.
Forward  looking  statements  would typically  include words like  "believes,"
"anticipates"  or  "estimates."  Many factors  could cause  actual  results to
differ  materially from these statements.  These factors include,  but are not
limited to, (i)  population  shifts  which may increase or decrease the demand
for  rental  housing,  (ii) the value of  commercial  and  residential  rental
properties  in  the  Northeast  where  all  of the  Company's  properties  are
located,  in recent years, have fluctuated  considerably,  (iii) the effect on
the Company's  properties of competition  from new apartment  complexes  which
may  be  completed  in  proximity  to  such  properties   thereby   increasing
competition,  (iv) the  effect  of  weather  and  other  conditions  which can
significantly  affect  property  operating  expenses,  (v) the  ability of the
Company to successfully  integrate the operation of properties it has acquired
or may  acquire  into its  business  and (vi)  other  factors  which  might be
described  from time to time in the Company's  filings with the Securities and
Exchange  Commission.  In  addition,  the Company is subject to the effects of
changes in general business economic conditions.





                                       17
<PAGE>



Part II.  Other Information

Item 1:  Legal Proceedings

NONE

Item 2:  Change in Securities and Use of Proceeds

NONE

Item 3:  Defaults upon Senior Securities

NONE

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

NONE

Item 5:  Other Information

NONE

Item 6:  Exhibits and Reports on Form 8-K

(a)    Exhibits

    No.        Description

    2.1  Agreement dated as of April 22, 1998 among The Grove  Corporation and
         the twenty-two limited partnerships  identified on Schedule 1 thereto
         (incorporated  by reference to Exhibit 2.1 to the  Company's  Current
         Report  on Form 8-K  dated  October  30,  1998  (Commission  File No.
         1-13080))

    2.2  Amendment dated as of August 31, 1998  to Conveyance  Agreement dated
         as of April 22, 1998 among The Grove Corporation  and the  twenty-one
         limited partnerships  identified on Schedule 1 thereto  (incorporated
         by reference to Exhibit 2.2 to the Company's  Current  Report on Form
         8-K dated October 30, 1998 (Commission File No. 1-13080))

    27   Financial Data Schedule

(b)    Reports on Form 8-K

    NONE





                                       18
<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.

                              REGISTRANT:

                              GROVE PROPERTY TRUST

November 13, 1998            By: /s/Joseph R. LaBrosse
                                 _________________________
                                 Name: Joseph R. LaBrosse
                                 (On  behalf  of the  registrant  and as Chief
                                 Financial Officer)





                                       19
<PAGE>






                            EXHIBIT INDEX

      Exhibit Number           Description

           2.1         Agreement dated as of April 22, 1998 among The
                       Grove Corporation and the twenty-two limited
                       partnerships identified on Schedule 1 thereto
                       (incorporated by reference to Exhibit 2.1 to the
                       Company's Current Report on Form 8-K dated October
                       30, 1998 (Commission File No. 1-13080))

           2.2         Amendment dated as of August 31, 1998 to Conveyance
                       Agreement dated as of April 22, 1998 among The
                       Grove Corporation and the twenty-one limited
                       partnerships identified on Schedule 1 thereto
                       (incorporated by reference to Exhibit 2.2 to the
                       Company's Current Report on Form 8-K dated October
                       30, 1998 (Commission File No. 1-13080))

            27         Financial Data Schedule


                                      E-1