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 March 31, 1999
                                       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           (IRS Employer Identification No.)
    of incorporation or organization)

       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 April 30,
1999 was 8,559,147.



                                       1
<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 March 31, 1999 and 
          December 31, 1998                                                 3

          Consolidated Statements of Income for the Three Months
          Ended March 31, 1999 and 1998                                     4

          Consolidated Statements of Cash Flows for the Three
          Months Ended March 31, 1999 and 1998                              5

          Notes to Consolidated Financial Statements                        6

Item 2:   Management's Discussion and Analysis of Financial 
          Condition and Results of Operations                              13

Item 3:   Quantitative and Qualitative Disclosures About Market Risk       17


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                                                                 20



                                       2
<PAGE>


<TABLE>
                                      GROVE PROPERTY TRUST
                                  CONSOLIDATED BALANCE SHEETS
                            (Dollars in thousands, except par value)


<CAPTION>
                                                                 March 31, 1999    December 31, 1998
                                                                 --------------    -----------------
                                                                   (Unaudited)         (Audited)

                                            ASSETS
                                            ------
<S>                                                                 <C>                <C>      
Real estate assets:
     Land ...................................................       $  47,154          $  47,208
     Buildings and improvements .............................         269,404            268,683
     Furniture, fixtures and equipment ......................           3,108              2,708
                                                                    ---------          ---------
                                                                      319,666            318,599
     Less accumulated depreciation ..........................         (12,084)            (9,651)
                                                                    ---------          ---------
       Net real estate assets ...............................         307,582            308,948
Cash and cash equivalents ...................................          10,147             15,262
Due from affiliates .........................................             208                262
Deferred charges, net of accumulated amortization                                   
     of $216 and $153, respectively .........................           1,363              1,192
Other assets ................................................           2,246              1,451
                                                                    ---------          ---------
  Total assets ..............................................       $ 321,546          $ 327,115
                                                                    =========          =========

                              LIABILITIES AND SHAREHOLDERS' EQUITY
                              ------------------------------------

Liabilities:                                                                        
     Mortgage notes payable (including  fair value step up of       $ 154,756          $ 162,141
       $8,742 and $9,421, respectively)                                             
     Revolving credit facility ..............................          38,800             34,250
     Other liabilities ......................................           5,211              5,723
     Acquisition notes payable                                                      
                                                                       12,408             12,951
     Distributions payable ..................................           2,213              2,062
     Security deposits ......................................           3,270              3,194
     Due to affiliates ......................................             262                139
                                                                    ---------          ---------
  Total liabilities .........................................         216,920            220,460
Minority interests in consolidated partnerships .............             683                686
Minority interest in  the Operating Partnership .............          31,604             32,186
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; 8,533,850 and 8,639,659                        
       shares issued and outstanding, respectively ..........              85                 86
     Additional paid-in capital .............................          79,163             80,182
     Distributions in excess of earnings ....................          (6,909)            (6,485)
                                                                    ---------          ---------
  Total shareholders' equity ................................          72,339             73,783
                                                                    ---------          ---------
  Total liabilities and shareholders' equity ................       $ 321,546          $ 327,115
                                                                    =========          =========
                                                                                  
See notes to consolidated financial statements.
</TABLE>


                                       3
<PAGE>


<TABLE>
                                       GROVE PROPERTY TRUST
                                 CONSOLIDATED STATEMENTS OF INCOME
                                            (UNAUDITED)


<CAPTION>
                                                                       For the Three Months Ended March 31,
                                                                              1999                1998
                                                                              ----                ----
                                                                       (In thousands, except per share data)

<S>                                                                          <C>                <C>    
Revenues:
    Rental income ...............................................            $15,253            $ 7,441
    Property management income- affiliates ......................                 49                 94
    Other property related income ...............................                174                 38
    Interest income .............................................                146                 15
                                                                             -------            -------
        Total revenues ..........................................             15,622              7,588
                                                                             -------            -------

Expenses:
    Property operating expenses .................................              6,086              2,647
    Real estate taxes ...........................................              1,410                779
    Interest expense ............................................              3,400              1,002
    Depreciation ................................................              2,433              1,143
    Amortization ................................................                 63                 36
    General and administrative ..................................                935                355
                                                                             -------            -------
        Total expenses ..........................................             14,327              5,962
                                                                             -------            -------

         Income before extraordinary items and minority interests              1,295              1,626

Minority interest in consolidated partnerships ..................                 15                 17

Minority interest in operating partnership ......................                387                422
                                                                             -------            -------

         Income before extraordinary items ......................                893              1,187

Extraordinary item related to debt extinguishment ...............                226                  0
                                                                             -------            -------

           Net income ...........................................            $ 1,119            $ 1,187
                                                                             =======            =======

Income before extraordinary item per common share - basic and
   assuming dilution ............................................            $  0.10            $  0.14
                                                                             =======            =======

Extraordinary item per common share - basic and
   assuming dilution ............................................            $  0.03            $  0.00
                                                                             =======            =======

Net income per common share - basic and assuming dilution .......            $  0.13            $  0.14
                                                                             =======            =======


Weighted average number of common shares outstanding-basic ......              8,642              8,454
Effect of warrants and stock options ............................                 84                 29
                                                                             -------            -------
Weighted average number of shares outstanding-assuming dilution .              8,726              8,483
                                                                             =======            =======
</TABLE>

See notes to consolidated financial statements.



                                       4
<PAGE>


<TABLE>
                                        GROVE PROPERTY TRUST
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                                              (UNAUDITED)

<CAPTION>
                                                                        For the Three Months Ended March 31,
                                                                             1999                 1998
                                                                             ----                 ----
                                                                                   (In thousands)
<S>                                                                       <C>                  <C>     
Operating Activities:
Net income ...................................................            $  1,119             $  1,187
Adjustments to reconcile net income to net cash provided
     by operating activities
         Depreciation and amortization .......................               2,496                1,179
         Extraordinary item related to debt extinguishment ...                (226)                  --
         Minority interests ..................................                 402                  439
         Non-cash compensation expense .......................                  30                   30
Change in other assets .......................................                (643)                (635)
Change in accounts payable, accrued expenses and other
     Liabilities .............................................                (980)                 442
                                                                          --------             --------
Net cash provided by operating activities ....................               2,198                2,642
                                                                          --------             --------

Investing activities:
     Purchase of partnership interests .......................                (249)                (214)
     Additions to real estate assets .........................              (1,044)              (8,375)
                                                                          --------             --------
         Net cash used in investing activities ...............              (1,293)              (8,589)
                                                                          --------             --------

Financing activities:
     Net proceeds from mortgage notes payable ................                 388                7,399
     Net proceeds (repayments) from  Revolving Credit Facility               4,550                   --
     Equity offering costs ...................................                 (11)                 (11)
     Repayment of mortgage notes payable .....................              (7,370)                 (52)
     Borrowings from (loans to) affiliates, net ..............                 154                  115
     Financing costs .........................................                (234)                  --
     Extraordinary item related to debt extinguishment .......                 (79)                  --
     Repurchase of stock .....................................              (1,358)                  --
     Dividends and distributions paid ........................              (2,060)              (1,461)
                                                                          --------             --------
         Net cash provided by (used in) financing activities .              (6,020)               5,990
                                                                          --------             --------

Net change in cash and cash equivalents ......................              (5,115)                  43
Cash and cash equivalents, beginning of period ...............              15,262                1,466
                                                                          --------             --------
Cash and cash equivalents, end of period .....................            $ 10,147             $  1,509
                                                                          ========             ========

Supplemental Information:
     Cash paid for interest ..................................            $  3,396             $  1,004
</TABLE>

See notes to consolidated financial statements.



                                       5
<PAGE>



                              GROVE PROPERTY TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 March 31, 1999

1.  FORMATION AND DESCRIPTION OF THE COMPANY 
    ----------------------------------------

    Grove  Property  Trust   (formerly  Grove  Real  Estate  Asset  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 sixty-one
    apartment  communities and four specialty retail  properties.  The apartment
    communities are generally mid-priced or subsidized multi-family  communities
    that are primarily located in the southern New England area.


2.  ACQUISITIONS AND EQUITY OFFERINGS
    ---------------------------------

    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  (as
    defined in Note 5).

    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 $6.8
    million  first  mortgages on the retail  property,  issuance of 5,818 Common
    Units  for $0.06  million,  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.

    As of October  31,  1998 for  financial  purposes  the  Company  acquired 18
    apartment  communities  located in Greater  Boston,  Massachusetts,  from an
    unrelated  party. The Operating  Partnership  issued 919,009 Common Units as
    part  of the  purchase  price  for  the  assets  acquired  from  the  McNeil
    Partnership,  at $9.82 per unit for $9.02 million,  assumed $62.3 million in
    debt and drew down $18.75  million under the 1998 Credit  Facility.  Certain
    other debt  obligations of the Company relate to this  acquisition (see Note
    6).

    On October 31, 1998,  management  contracts purchased in connection with the
    McNeil Transaction were expensed.

    On November 30, 1998 the Company acquired an apartment community, Rockingham
    Glen Apartments,  located in West Roxbury, Massachusetts , from an unrelated
    party.  The  Operating  Partnership  issued  104,525  Common Units valued at
    $10.40 per unit for $1.09 million, assumed $4.4 million in mortgage debt and
    borrowed $2.9 million under the 1998 Credit Facility.

    As of  December  31, 1998 for  financial  purposes  the Company  acquired an
    apartment  community,   Highland  Glen  Apartments,   located  in  Westwood,
    Massachusetts,  from an unrelated  party. The Operating  Partnership  issued
    23,091  Common Units as part of the purchase  price for the assets  acquired
    from the McNeil Partnership,  at $11.43 per unit for $0.26 million,  assumed
    $6.9  million in  mortgage  debt and drew down $0.5  million  under the 1998
    Credit  Facility.  Certain other debt  obligations  of the Company relate to
    this acquisition (see Note 6).

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



                                       6
<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 March 31, 1999 are not  necessarily
    indicative of the results that may be expected for the year ending  December
    31, 1999. 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, 1998.

    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,
    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 exclude the dilutive effects of options and


                                       7
<PAGE>


    warrants.  Earnings per share,  assuming dilution,  is very similar to fully
    diluted earnings per share.

    Income per common share  information is based on the weighted average number
    of Common Shares outstanding during each period.


    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 (see Note 7).

    Advertising
    -----------

    The Company expenses  advertising costs as incurred.  Advertising costs were
    $129,642  and  $106,354  for the three months ended March 31, 1999 and 1998,
    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
    ----------------------

    Total mortgage notes payable of  $154,756,000  includes a fair value step up
    of $8,742,000.  The  contractual  principal  amount  outstanding of mortgage
    notes payable is $146,014,000. The $8,742,000 step up relates to $47,989,000
    of above market  interest rate  mortgages,  which were assumed in connection
    with the purchase of the McNeil Portfolio. The interest rates on the assumed
    debt are  between  7.46%  and  12.47%.  The step up was  computed  using the
    Company's  estimated  current market interest rate of 7%. The step up amount
    is not the legal stipulated principal amount of the respective mortgage and,
    accordingly,  this increase does not increase the contractual  obligation of
    the Company.  If these loans are paid off in advance of their maturity,  the
    amount of the related  step up on the  consolidated  balance  sheets will be
    accounted for as extraordinary income (see Note 2).

    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 1998 Credit Facility and
    the remaining amount of approximately  $4.0 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.

    On March 15, 1999 the Company  prepaid The Highland  Glen  mortgage  note of
    $6.5 million.  This  prepayment  transaction  resulted in the recognition of
    extraordinary  income related to debt  extinguishment of $0.32 million ($0.4
    million fair value step up offset by $0.08  million  prepayment  penalty and
    other expenses related to the prepayment of the mortgage).

    As of March 31, 1999, the Company's  weighted  average  interest rate on its
    long-term debt is 7.81% and its weighted average maturity is 11 years.


                                       8
<PAGE>


    Mortgage  notes  payable  consist  of the  following  at March 31,  1999 (in
    thousands):

      Amortizing first mortgage notes          $  87,756
      Interest only first mortgage notes          67,000
                                              -----------
                                               $ 154,756
                                              ===========

    The amortizing  first mortgage notes have fixed interest rates between 7.04%
    and  12.47%.  These  notes  mature  between  the years 2000 and 2031 and are
    collateralized  by  twenty-seven of the properties with a carrying amount of
    approximately  $129,710 million as of March 31, 1999. Certain of these notes
    are partially  guaranteed by certain executive  officers and shareholders of
    the Company.

    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  $7.8 million as of March
    31, 1999. 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 $85.4 million as of March
    31, 1999.

    Annual  principal  payments  due as of March 31,  1999,  are as follows  (in
    thousands):

                           Period Ending March 31,
                           -----------------------
                           1999          $  2,690
                           2000             5,201
                           2001             3,400
                           2002             3,562
                           2003             7,778
                           Thereafter     132,125
                                         --------
                                         $154,756
                                         ========

5.  REVOLVING CREDIT FACILITY
    -------------------------

    In  March,  1997,  the  Operating  Partnership  entered  into  the  Original
    Revolving  Credit  Facility,  guaranteed  by the  Company  for  up to  $25.0
    million.  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 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 March 31, 1999,  the 1998
    Credit Facility had $38.8 million outstanding.  The Operating Partnership is
    required to meet certain  financial  covenants as defined in the 1998 Credit
    Facility agreement.

6.  ACQUISITION NOTES PAYABLE
    -------------------------

    In conjunction with the purchase of the McNeil Portfolio, the Company agreed
    to issue additional Common Units and pay cash to certain continuing partners
    in the event that a McNeil Portfolio property was converted to a market rate
    property.  The Acquisition  Notes Payable are  obligations  related to three
    McNeil  Properties  (Rockingham  Glen, 929 House,  and Glen Meadow),  to pay
    additional  cash and issue  additional  Common Units when the properties are
    converted to market rate properties.  On November 30, 1998, the mortgages on
    two of the  properties  (Glen  Meadow and 929 House) were  modified to allow
    these  properties  to be converted to 80% market rate units and 20% moderate
    income units. The Rockingham Glen mortgage was modified in the third quarter
    of 1998 to allow this  property to be converted to 80% market rate units and
    20% moderate income units. It is anticipated that approximately $5.1 million
    of the Acquisition  Notes Payable will be paid on April 30, 1999 (consisting
    of approximately $1.8 million in cash and $3.3 million in Common Units). The
    majority  of the  remaining  balance  of the  Acquisition  Notes  Payable of
    approximately  $7.3  million  is  expected  to be paid on October  31,  1999
    (consisting of  approximately  $4.0 million in cash and  approximately  $3.3
    million in Common Units).  When the Common Units are issued, the Acquisition
    Notes  Payable  balance  will be reduced by the value of Common Units issued
    and the Company's  Minority  Interests in the Operating  Partnership will be
    increased by a corresponding amount.


                                       9
<PAGE>



7.  SHAREHOLDERS' EQUITY

    The  following  table  outlines the 1999 and 1998  activity in the Operating
    Partnership equity accounts:

<TABLE>
<CAPTION>
                                                                        Number of:
                                                                  --------------------------
                                                                                  Limited
                                                                   Company's     Partners'
                                                                   Operating     Operating
                                                                  Partnership   Partnership
                                                                     Units         Units
                                                                     -----         -----
    <S>                                                            <C>           <C>      
    Outstanding at January 1, 1998                                 8,453,829     3,003,792
    April 1998 acquisitions                                             -            5,818
    Common  Units redeemed April 1998 through December 1998             -         (252,153)
    Common  Units exchanged July 1998 through December  1998          35,307       (35,307)
    Common Shares repurchased  September 1998 through December      (304,630)          -
    1998                                                        
    Executive stock grants - September 1998                           63,153           -
    Private placement to executive officers - November 1998          392,000           -
    October 1998 acquisitions                                            -         919,009
    November 1998 acquisitions                                           -         104,525
    December 1998 acquisitions                                           -          23,091
                                                                  --------------------------
    Outstanding at December 31, 1998                               8,639,659     3,768,775
    Common  Units exchanged January 1999 through March 1999           18,177       (18,177)
    Common  Units redeemed January 1999 through March 1999              -          (22,321)
    Common Shares repurchased January 1999 through March 1999       (123,986)         -  
                                                                  --------------------------
    Outstanding at March 31, 1999                                  8,533,850     3,728,277
                                                                  ==========================
       Ownership Percentage                                            69.6%         30.4%
                                                                  ==========================
</TABLE>
  
    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 Common Units held by the Limited  Partners other than the
    Company  ("Minority  Interest") by the total  weighted  average Common Units
    outstanding.  Issuance  of  additional  Common  Shares  in  connection  with
    requested  redemption's  of Common Units or  redemption  of Common Units for
    cash changes the ownership  percentage of both the Minority Interest and the
    Company. Such transactions and the proceeds therefrom are treated as capital
    transactions and result in an allocation  between  Shareholders'  Equity and
    Minority Interest in the Operating  Partnership to account for the change in
    the  respective  percentage  ownership  of  the  underlying  equity  of  the
    Operating Partnership.

    A  Common  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 Operating  Partnership.  Common 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.  Common
    Shares have been reserved for future issuance as follows:



        Common  Units not owned by the Company (see above)     3,728,277
        Underwriters warrants                                     47,248
        Stock options issued                                   1,124,623
        Additional stock options issuable                        443,100
                                                              ----------
                                                               5,343,248
                                                              ==========


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

    The  following  disclosures  of  estimated  fair  value were  determined  by
    management  using available  market  information  and appropriate  valuation
    methodologies.  Judgment is necessary  to interpret  market data and develop
    estimated fair value.  Accordingly,  the estimates  presented herein are not
    necessarily   indicative  of  the  amounts  the  Company  could  realize  on
    disposition  of the  financial  instruments.  The  use of  different  market
    assumptions  and/or  estimation  methodologies may have a material effect on
    the estimated fair values.

    Cash equivalents, accounts receivable and accounts payable, because of their
    short-term nature,  approximate fair value. Mortgage notes payable, the 1998
    Credit Facility,  and Acquisition  Notes Payable are also carried at amounts
    that approximate their fair values.



                                       10
<PAGE>



9.  SEGMENT REPORTING
    -----------------

    The  Company's  reportable  segments  are  strategic  real  estate  types of
    investments.  They are  managed  separately  because  each real  estate type
    requires a different strategy.

    The  Company  has  three  reportable   segments;   residential,   subsidized
    residential,  and retail. The residential  segment includes those properties
    that are rented to residents only for residential  purposes.  The subsidized
    residential  segment  includes  properties  that are  used  for  residential
    purposes;  however, these properties are operating and receive subsidization
    under  various  programs  accordingadministered  by the U.S.  Department  of
    Housing  and  Urban  Development  or  the  M  assachusetts  Housing  Finance
    Authority.  The retail  segment  includes  those  properties  whose space is
    rented for stores, restaurants, and other retail uses.

    The following table presents  information  about reported  segment profit or
    loss and segment  assets.  The Company  does not  allocate  income  taxes or
    unusual items to segments.  In addition,  not all segments have  significant
    noncash items other than  depreciation  and amortization in reporting profit
    or loss (dollars in thousands):

<TABLE>
                             Three Months Ended March 31, 1999
                             ---------------------------------

<CAPTION>
                                                     Subsidized
                                     Residential     Residential      Retail         Total
                                     -----------     -----------      ------         -----

<S>                                    <C>            <C>            <C>            <C>     
Revenues ......................        $ 11,413       $  3,455       $    660       $ 15,528
Interest Expense ..............        $  1,938       $    806       $     70       $  2,814
Depreciation and amortization..        $  1,889       $    357       $    143       $  2,389
Segment Profit ................        $  2,194       $  1,237       $    288       $  3,719
Extraordinary income ..........        $      0       $    324       $      0       $    324
Segment Assets ................        $237,335       $ 54,351       $ 19,657       $311,343
FFO ...........................        $  4,065       $  1,269       $    429       $  5,763
</TABLE>


<TABLE>
                             Three Months Ended March 31, 1998
                             ---------------------------------

<CAPTION>
                                                     Subsidized
                                     Residential     Residential      Retail         Total
                                     -----------     -----------      ------         -----

<S>                                    <C>            <C>            <C>            <C>     
Revenues ......................        $  7,069       $      0       $    398       $  7,467
Interest Expense ..............        $    527       $      0       $     70       $    597
Depreciation and amortization..        $  1,089       $      0       $     78       $  1,167
Segment Profit ................        $  2,051       $      0       $    137       $  2,188
Extraordinary income ..........        $      0       $      0       $      0       $      0
Segment Assets ................        $135,296       $      0       $ 10,880       $146,176
FFO ...........................        $  3,104       $      0       $    216       $  3,320
</TABLE>

    The accounting  policies of the segments are the same as those  described in
    the  summary of  significant  accounting  policies.  The  Company  evaluates
    performance based upon profit or loss from operations before income taxes.

    The following presentation of reconciliation of reportable segment revenues,
    profit or loss, and assets, to the Company's consolidated totals.


                                               For the Three Months Ended
                                                         March 31,
                                                    1999          1998
                                                    ----          ----
Revenues
--------
     Total revenues for reportable segments        $15,528       $7,467
     Other revenues                                     94          121
                                                   -------       ------
     Total consolidated revenues                   $15,622       $7,588
                                                   =======       ======



                                       11
<PAGE>


                                               For the Three Months Ended
                                                         March 31,
                                                    1999          1998
                                                    ----          ----
Profit or Loss
--------------

     Total profit/loss for reportable segments     $ 3,719       $ 2,188
     Other profit or loss                           (2,424)         (562)
                                                   -------       -------
     Income before extraordinary item and 
        minority interests                         $ 1,295       $ 1,626
                                                   =======       =======

Assets
------

     Total assets for reportable segments         $311,343      $146,176
     Other revenues                                 10,203         9,777
                                                  --------      --------
     Total consolidated revenues                  $321,546      $155,953
                                                  ========      ========


                                        Three Months Ended March 31, 1999
                                        ---------------------------------

Other Significant Items
-----------------------
                                     Segment                    Consolidated
                                     Totals       Non-segment      Totals
                                     ------       -----------      ------

     Interest expense               $  2,814        $    586      $  3,400
     Depreciation and amortization  $  2,389        $    107      $  2,496



                                        Three Months Ended March 31, 1999
                                        ---------------------------------

Other Significant Items
-----------------------
                                     Segment                    Consolidated
                                     Totals       Non-segment      Totals
                                     ------       -----------      ------
     Interest expense               $    597        $    405      $  1,002
     Depreciation and amortization  $  1,167        $     12      $  1,179



                                       12
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

OVERVIEW

The results of operations  for the three months ended March 31, 1999 include the
three  multifamily  properties  that the Company has owned since  inception (the
"Original Properties"), a fourth property that was acquired on January 12, 1996,
twenty  properties  acquired  on  March  14,  1997  ,  the  fourteen  properties
subsequently   acquired  in  1997   (collectively   referred  to  as  the  "1997
Properties")  and  the  twenty-sevenproperties  purchased  in  1998  (the  "1998
Properties").  In addition,  all of the previously  mentioned  properties of the
Company are collectively referred to as the "Properties".

The results of operations  for the three months ended March 31, 1999 include the
61 residential  communities  and four retail  properties  owned since January 1,
1998.

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

RESULTS OF OPERATIONS

Results of  Operations  of the Company for the Three Months Ended March 31, 1999
--------------------------------------------------------------------------------
and 1998.
---------

Total revenues  increased  $7,812,000 from $7,441,000 to $15,253,000  during the
three months ended March 31, 1999,  as compared to the  corresponding  period in
1998. The increase is primarily due to the operations of the properties acquired
during  the  period  from  April  1998  to  December   31,  1998  (the   "Recent
Acquisitions").  (See  Note  2 to  the  consolidated  financial  statements  for
details.)

The  properties  experienced  an  increase  in rental  rates and an  increase in
occupancy.  The weighted  average monthly rental rates increased to $775 for the
three  months  ended  March  31,  1999  from  $700 for the same  period in 1998.
Economic occupancy increased to an aggregate weighted average occupancy of 95.7%
for the three  months ended March 31, 1999 from an  aggregate  weighted  average
occupancy of 94.3% for the same period in 1998.

Property operating and maintenance expenses increased $3,439,000 from $2,647,000
to  $6,086,000  during the three months ended March 31, 1999, as compared to the
corresponding period in 1998. The increase is primarily due to the operations of
the Recent Acquisitions.

Real estate taxes  increased  $631,000 from  $779,000 to  $1,410,000  during the
three months ended March 31, 1999,  as compared to the  corresponding  period in
1998. The increase is due primarily to the Recent Acquisitions.

Interest expense  increased  $2,398,000 from $1,002,000 to $3,400,000 during the
three months ended March 31, 1999,  as compared to the  corresponding  period in
1998.  The increase is primarily due to the  assumption of mortgage debt and new
debt related to the Recent Acquisitions.

General and administrative expenses increased $580,000 from $355,000 to $935,000
during the three months ended March 31, 1999,  as compared to the  corresponding
period in 1998. This increase is primarily due to the increased costs associated
with the change in size and structure of the Company.

Depreciation and amortization increased $1,317,000 from $1,179,000 to $2,496,000
during the three months ended March 31, 1999,  as compared to the  corresponding
period in 1998. This increase is related to the Recent Acquisitions.

The  Company's  income  before   extraordinary  items  decreased  $294,000  from
$1,187,000 to $893,000 during the three months ended March 31, 1999, as compared
to the corresponding period in 1998. The decrease in income before extraordinary
items is primarily due to increased  interest expense due to borrowings  related
to property acquisitions.

In March 1999 the  Company  prepaid  The  Highland  Glen  mortgage  note of $6.5
million.   This   prepayment   transaction   resulted  in  the   recognition  of
extraordinary  income  related to debt  extinguishment  of $0.32  million  ($0.4
million fair value step up offset by $0.08 million prepayment penalty).



                                       13
<PAGE>



SAME COMMUNITY ANALYSIS

For the Three Months Ended March 31, 1999 and 1998.
---------------------------------------------------

The Same Community analysis includes 35 apartment communities (3,506 apartments)
owned by Grove or its affiliated  predecessors since the beginning of 1998. On a
Same Community  basis,  the weighted  average  monthly rental rate per apartment
increased  4.3% to $734 from $704 and the economic  occupancy  rate increased to
95.7% from 94.2% for the first quarter of 1999 versus the first quarter of 1998.
Overall,  Same  Community net operating  income  increased 8.2% to $4.26 million
from $3.93  million for the first  quarter of 1999  versus the first  quarter of
1998.  Net operating  income  increased  8.2% due to a 6.4% increase in revenues
offset by a 4.0%  increase in  operating  expenses.  Revenues  increased  due to
increases in rental rates and  occupancy.  Expenses  increased  primarily due to
increased  snow  removal  costs  as  compared  to  the  unusually  mild  weather
experienced in the first quarter of 1998.

The following table summarizes Same Community operations:

                                         ------------------
                                         Three Months Ended
                                               March 31,          %
                                         ------------------
                                           1999       1998      Change
                                           ----       ----      ------
Economic Occupancy                         95.7%      94.2%       1.5%
                                         =====================
Average monthly rental rate per unit       $ 734     $ 704        4.3%
                                         =====================
Revenues (millions)                        $7.40     $6.96        6.4%
Operating expenses (millions)               3.14      3.02        4.0%
                                         ------------------------------
    Net operating income (millions)        $ 4.26    $3.93        8.2%
                                         ==============================


LIQUIDITY AND CAPITAL RESOURCES

Cash  and  cash  equivalents  totaled  $10,147,000  as of March  31,  1999.  The
Company's ratio of long-term  debt,  including the 1998 Credit Facility to total
market  capitalization  on March  31,  1999  was  57.3%  based  on total  market
capitalization  of $337.64  million based on 12,262,127  Common Units and Common
Shares  valued at $11.75 per  share/unit  (the closing  price on March 31, 1999)
plus $193.55 million of long-term debt, including the 1998 Credit Facility.

Cash provided by operating  activities was $2,197,863 for the three months ended
March 31, 1999.  Cash used in investing  activities was $1,292,993 for the three
months  ended  March  31,  1999.  Net  cash  used in  financing  activities  was
$6,019,618 for the three months ended March 31, 1999.

On March 17, 1999, the Company declared a dividend of $0.18 per share, which was
paid on April 15, 1999. The dividends  declared  during the period resulted in a
61.7% pay out of funds from  operations  for the three  months  ended  March 31,
1999.

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 March 31, 1999,  borrowings of
$38.8 million were outstanding under the 1998 Credit Facility.

Acquisition  Notes Payable are  obligations  related to three McNeil  Properties
(Rockingham Glen, 929 House, and Glen Meadow),  to pay additional cash and issue
additional  Common  Units  when the  properties  are  converted  to market  rate
properties.  On November 30, 1998, the mortgages on two of the properties  (Glen
Meadow and 929 House) were modified to allow these properties to be converted to
80%  market  rate units and 20%  moderate  income  units.  The  Rockingham  Glen
mortgage was modified in the third  quarter of 1998 to allow this property to be
converted  to 80%  market  rate  units  and 20%  moderate  income  units.  It is
anticipated  that  approximately  $4.1 million of the Acquisition  Notes Payable
will be paid on April 30, 1999 (consisting of approximately $0.7 million in cash
and $3.4 million in Common Units).  The majority of the remaining balance of the
Acquisition  Notes Payable of approximately  $8.3 million is expected to be paid
on October  31,  1999  (consisting  of  approximately  $4.1  million in cash and
approximately  $4.2 million in Common Units).  When the Common Units are issued,
the  Acquisition  Notes  Payable  balance will be reduced by the value of Common
Units issued and the Company's Minority  Interests in the Operating  Partnership
will be increased by a corresponding amount.


                                       14
<PAGE>



During  1998,  the Board of Directors  authorized  the Company to purchase up to
400,000  Common  Shares.  In the first  quarter of 1999,  the Board of Directors
authorized  the Company to purchase up to an additional  500,000  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 March 31, 1999,  the
Company has  repurchased  428,616  shares from  inception at an average price of
$10.13 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.

The  Company  regularly  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.

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.  To  date,  the  Company
anticipates that the upgrade of its information systems will be completed during
1999 and  believes  that the cost  thereof is not  material  and will not have a
material impact on net income, assets or liabilities. The Company has incurred $
0  specifically  related to Year 2000  compliance  and  anticipates  $ 50,000 of
future  related  costs.  The Company has  identified  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.  The following table outlines the Company's status to date
of risks associated with the Year 2000 problem:

<TABLE>
<S>                  <C>                  <C>                  <C>                  <C>
-------------------- -------------------- -------------------- -------------------- --------------------
                         ASSESSMENT          REMEDIATION            TESTING           IMPLEMENTATION
-------------------- -------------------- -------------------- -------------------- --------------------
INFORMATION          100% Complete        70% Complete         70% Complete         70% Complete
TECHNOLOGY
                                          Expected             Expected             Expected
                                          completion date,     completion date,     completion date,
                                          October 1999         October 1999         October 1999
-------------------- -------------------- -------------------- -------------------- --------------------
OPERATING
EQUIPMENT WITH       100% Complete        50% Complete         30% Complete         20% Complete
EMBEDDED CHIPS OR
SOFTWARE                                  Expected             Expected             Expected
                                          completion date,     completion date,     completion date,
                                          September 1999       September 1999       September 1999
-------------------- -------------------- -------------------- -------------------- --------------------
3RD PARTY            Expected             50% Complete         50% Complete         50% Complete
                     completion date
                     for surveying all
                     third parties,
                     June 1999
-------------------- -------------------- -------------------- -------------------- --------------------
</TABLE>

Although the Company  believes that there will be no direct material  effects on
its net income,  assets or liabilities  from the Year 2000 problem as it relates
to the above  stated  systems,  it is not  possible  to quantify  any  potential
indirect  effects  that may result from the lack of Year 2000  readiness  on the
part of other third parties with whom the Company conducts its business.

Widespread  disruptions  in the  national or  international  economy,  including
disruptions  affecting the financial  markets,  resulting from Year 2000 issues,
could also have an adverse  impact on the Company.  The likelihood and effect of
such disruptions to residential,  subsidized residential,  and retail properties
is not  determinable  at  this  time.  The  Company's  fallback  position,  if a
disruption   does  occur,   is  to  rebuild   its   information   systems   from
contemporaneous  manual monthly records maintained at the Company's main office.
Property sites consist mainly of single-story  and low-rise  buildings with very
little reliance on microprocessors imbedded in systems that are part of property
operating systems.  Any possible disruption can be avoided by manually operating
these property systems.


                                       15
<PAGE>


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 $2.7 million to $3.6 million for the three months ended March
31, 1999 from the three months ended March 31, 1998.  Dividends declared for the
three  months ended March 31, 1999 were $0.18 per share,  representing  60.8% of
FFO,  while  dividends  declared  for the three months ended March 31, 1998 were
$0.17 per share representing 71.3% of FFO.

FFO was calculated as follows (in thousands):

                                                      For the Three Months
                                                         Ended March 31,
                                                        1999        1998
                                                        ----        ----
Income before minority interests and           
    extraordinary items                                $1,295       $1,626
Real estate depreciation and amortization               2,375        1,135
                                                     -----------  ----------
Funds from operations before minority                   3,670        2,761
interests                                      
Minority interests in consolidated partnerships            30           29
                                                     ===========  ==========
FFO                                                    $3,640       $2,732
                                                     ===========  ==========
                                          

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.

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.

"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


                                       16
<PAGE>


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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 

The  Company is exposed to changes in  interest  rates  primarily  from its 1998
Credit  Facility.  A  hypothetical  100 basis point  adverse move  (decrease) in
interest rates along the entire interest rate yield curve would adversely affect
the net fair value of all interest sensitive  financial  instruments by $388,000
at March 31, 1999.



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

     27       Financial Data Schedule

(b)  Reports on Form 8-K

     During the quarter ended March 31, 1999, the Company filed a Current Report
     on  Form  8-K  dated  January  14,  1999  (reporting  under  Items 5 and 7)
     regarding the Company's  acquisition of one residential property; a Current
     Report on Form  8-K/A no. 1 dated  December  2,  1998,  amending  Item 7 as
     originally  filed;  and a Current  Report on Form 8-K/A no. 1 dated January
     14, 1999,  amending Item 7 as originally filed.  Amendments to such Current
     Reports included the following financial statements:

12/2/98 FORM 8-K:
-----------------
     (a)  Financial Statements of business acquired.

Abington Glen and Rockingham Glen
---------------------------------
Statement of Revenue and Certain  Expenses  for the nine months ended  September
30, 1998 and the year ended December 31, 1997.

     (b)  Pro Forma Financial Statements.

          Pro Forma Condensed Consolidated Balance Sheet of Grove Property Trust
          (the "Company") (Unaudited):

          Pro Forma  Condensed  Consolidated  Balance Sheet of the Company as of
          September 30, 1998.

          Notes to the Pro Forma Condensed Consolidated Balance Sheet.

          Pro Forma Condensed  Consolidated  Statements of Income of the Company
          for the nine  months  ended  September  30,  1998  and the year  ended
          December 31, 1997.

          Notes to the Pro Forma Condensed Consolidated Statements of Income.

1/14/99 FORM 8-K:
-----------------
     (a)  Financial Statements of business acquired.

Highland Glen
-------------
Statement of Revenue and Certain  Expenses  for the nine months ended  September
30, 1998 and the year ended December 31, 1997.



                                       18
<PAGE>



     (b)  Pro Forma Financial Statements.

          Pro  Forma  Condensed   Consolidated  Balance  Sheet  of  the  Company
          (Unaudited):

          Pro Forma  Condensed  Consolidated  Balance Sheet of the Company as of
          September 30, 1998.

          Notes to the Pro Forma Condensed Consolidated Balance Sheet.

          Pro Forma Condensed  Consolidated  Statements of Income of the Company
          for the nine  months  ended  September  30,  1998  and the year  ended
          December 31, 1997.

          Notes to the Pro Forma Condensed Consolidated Statements of Income.



                                       19
<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


May 13, 1999                        By: /S/ JOSEPH R. LABROSSE
                                       -------------------------------------
                                       Name: Joseph R. LaBrosse
                                       (On behalf of the registrant and as 
                                       Chief Financial Officer)









                                       20
<PAGE>



                                  EXHIBIT INDEX

          Exhibit Number                Description
          --------------                -----------

               27                  Financial Data Schedule