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, 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 of        (IRS Employer Identification No.)
    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 October 31,
1999 was 8,174,966.



                                       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 September  30, 1999 and
           December 31, 1998                                                   3

           Consolidated Statements of Income for the Three Months
           Ended September 30, 1999 and 1998                                   4

           Consolidated Statements of Income for the Nine Months Ended
           September 30, 1999 and 1998                                         5

           Consolidated Statements of Cash Flows for the Nine Months
           Ended September 30, 1999 and 1998                                   6

           Notes to Consolidated Financial Statements                          7

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

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                                                                    19



                                  2
<PAGE>


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

<CAPTION>
                                                      September 30, 1999    December 31, 1998
                                                      ------------------    -----------------
                                                         (Unaudited)            (Audited)

                                          ASSETS
                                          ------
<S>                                                        <C>                 <C>
Real estate assets:
    Land ........................................          $  45,653           $  47,208
    Buildings and improvements ..................            263,042             268,683
    Furniture, fixtures and equipment ...........              3,530               2,708
                                                           ---------           ---------
                                                             312,225             318,599
    Less accumulated depreciation ...............            (15,158)             (9,651)
                                                           ---------           ---------
      Net real estate assets ....................            297,067             308,948
Real estate held for sale .......................             11,796                   0
Cash and cash equivalents .......................             14,245              15,262
Due from affiliates .............................                130                 262
Deferred charges, net of accumulated amortization
    of $158 and $153, respectively ..............              1,692               1,192
Other assets ....................................              2,293               1,451
                                                           ---------           ---------
  Total assets ..................................          $ 327,223           $ 327,115
                                                           =========           =========

                           LIABILITIES AND SHAREHOLDERS' EQUITY
                           ------------------------------------
Liabilities:
    Mortgage notes payable (including  fair value
      step up of $8,423 and $9,421, respectively)          $ 183,247           $ 162,141
    Revolving credit facility ...................             22,250              34,250
    Other liabilities ...........................              5,398               5,723
    Acquisition notes payable ...................              7,341              12,951
    Distributions payable .......................              2,202               2,062
    Security deposits ...........................              3,538               3,194
    Due to affiliates ...........................                325                 139
                                                           ---------           ---------
  Total liabilities .............................            224,301             220,460
Minority interests in consolidated partnerships .                638                 686
Minority interest in the Operating Partnership ..             32,157              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; 8,380,510 and
      8,639,659 shares issued and outstanding,
      respectively ..............................                 84                  86
    Additional paid-in capital ..................             77,766              80,182
    Distributions in excess of earnings .........             (7,723)             (6,485)
                                                           ---------           ---------
  Total shareholders' equity ....................             70,127              73,783
                                                           ---------           ---------
  Total liabilities and shareholders' equity ....          $ 327,223           $ 327,115
                                                           =========           =========
</TABLE>

See notes to consolidated financial statements.


                                  3
<PAGE>

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


<CAPTION>
                                                                  For the Three Months Ended September 30,
                                                                            1999              1998
                                                                            ----              ----
                                                                    (In thousands, except per share data)

<S>                                                                        <C>              <C>
Revenues:
    Rental income ...............................................          $15,918          $ 9,252
    Property management income-affiliates .......................               61              108
    Other property related income ...............................              208               72
    Interest income .............................................              126               29
                                                                           -------          -------
        Total revenues ..........................................           16,313            9,461
                                                                           -------          -------

Expenses:
    Property operating expenses .................................            5,583            3,060
    Real estate taxes ...........................................            1,468              945
    Interest expense ............................................            3,625            1,666
    Depreciation ................................................            2,552            1,550
    Amortization ................................................               61               64
    General and administrative ..................................            1,087              443
                                                                           -------          -------
        Total expenses ..........................................           14,376            7,728
                                                                           -------          -------

         Income before loss on sale, extraordinary items,
           and minority interests ...............................            1,937            1,733

Loss on sale of property ........................................               32                0
                                                                           -------          -------

         Income before extraordinary items and minority interests            1,905            1,733

Minority interest in consolidated partnerships ..................               23               20

Minority interest in Operating Partnership ......................              594              424
                                                                           -------          -------

         Income before extraordinary items ......................            1,288            1,289

Extraordinary expense related to debt refinancing and ...........              111                0
   extinguishment
                                                                           -------          -------

           Net income ...........................................          $ 1,177          $ 1,289
                                                                           =======          =======

Income before extraordinary expense per common share - basic and
   assuming dilution ............................................          $  0.15          $  0.15
                                                                           =======          =======

Extraordinary expense per common share - basic and
   assuming dilution.............................................          $ (0.01)         $ (0.00)
                                                                           =======          =======

Net income per common share - basic and assuming dilution........          $  0.14          $  0.15
                                                                           =======          =======

Weighted average number of common shares outstanding - basic ....            8,472            8,477
Effect of warrants and stock options ............................              223             --
                                                                           -------          -------
Weighted average number of shares outstanding - assuming dilution            8,695            8,477
                                                                           =======          =======
</TABLE>


See notes to consolidated financial statements.


                                  4
<PAGE>


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

<CAPTION>
                                                                    For the Nine Months Ended September 30,
                                                                             1999              1998
                                                                             ----              ----
                                                                     (In thousands, except per share data)

<S>                                                                        <C>               <C>
Revenues:
    Rental income ...............................................          $ 46,786          $ 25,130
    Property management income- affiliates ......................               201               341
    Other property related income ...............................               566               156
    Interest income .............................................               406                75
                                                                           --------          --------
        Total revenues ..........................................            47,959            25,702
                                                                           --------          --------

Expenses:
    Property operating expenses .................................            17,488             8,600
    Real estate taxes ...........................................             4,331             2,561
    Interest expense ............................................            10,473             4,056
    Depreciation ................................................             7,501             3,959
    Amortization ................................................               180               135
    General and administrative ..................................             3,192             1,242
                                                                           --------          --------
        Total expenses ..........................................            43,165            20,553
                                                                           --------          --------

         Income before loss on sale, extraordinary items,
           and minority interests ...............................             4,794             5,149

Loss on sale of property ........................................                32                 0
                                                                           --------          --------

         Income before extraordinary items and minority interests             4,762             5,149

Minority interest in consolidated partnerships ..................                65                58

Minority interest in Operating Partnership ......................             1,462             1,303
                                                                           --------          --------

         Income before extraordinary items ......................             3,235             3,788

Extraordinary income (expense) related to debt refinancing and
   extinguishment ...............................................               111              (838)
                                                                           --------          --------

           Net income ...........................................          $  3,346          $  2,950
                                                                           ========          ========

Income before extraordinary income (expense) per common share -
   basic                                                                   $   0.38          $   0.45
                                                                           ========          ========

Extraordinary income (expense) per common share - basic                    $   0.01          $  (0.10)
                                                                           ========          ========

Net income per common share - basic                                        $   0.39          $   0.35
                                                                           ========          ========

Income before extraordinary income (expense) per common share -
   diluted                                                                 $   0.37          $   0.45
                                                                           ========          ========

Extraordinary income (expense) per common share - diluted                  $   0.01          $  (0.10)
                                                                           ========          ========

Net income per common share - diluted                                      $   0.38          $   0.35
                                                                           ========          ========

Weighted average number of common shares outstanding - basic ....             8,541             8,462
Effect of warrants and stock options ............................               150                 6
                                                                           --------          --------
Weighted average number of shares outstanding - assuming dilution             8,691             8,468
                                                                           ========          ========
</TABLE>

See notes to consolidated financial statements.


                                       5
<PAGE>

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

<CAPTION>
                                                            For the Nine Months Ended
                                                                  September 30,
                                                               1999           1998
                                                               ----           ----
                                                                  (In thousands)
<S>                                                          <C>           <C>
Operating Activities:
Net income .............................................     $  3,346      $  2,950
Adjustments to reconcile net income to net cash provided
    by operating activities
        Depreciation and amortization ..................        7,681         4,094
        Extraordinary (income) expense related to debt
         refinancing and extinguishment ................         (111)          838
        Minority interests .............................        1,527         1,361
        Non-cash compensation expense ..................           90            90
        Loss on sale of property .......................           33             0
Change in other assets

Change in accounts payable, accrued expenses and other
    liabilities ........................................       (1,569)          602

                                                             --------      --------
Net cash provided by operating activities ..............       10,332         8,018
                                                             --------      --------

Investing activities:
    Purchase of partnership interests ..................       (2,730)       (2,751)
    Deferred charges ...................................           (1)          (23)
    Cash acquired on purchase of partnership interests .         --              62
    Additions to real estate assets ....................       (7,567)      (35,169)
    Net proceeds from sale of property .................          248             0
                                                             --------      --------
        Net cash used in investing activities ..........      (10,050)      (37,881)
                                                             --------      --------

Financing activities:
    Net proceeds from mortgage notes payable ...........       34,938        63,000
    Net (repayments) of Revolving Credit Facility ......      (12,000)       (6,001)
    Proceeds from exercise of stock options ............          535          --
    Equity offering costs ..............................          (11)          (63)
    Repayment of mortgage notes payable ................      (13,428)      (18,210)
    Borrowings from affiliates, net ....................          294           177
    Financing costs ....................................         (947)         (740)
    Prepayment penalty on debt refinancing .............         --            (669)
    Repurchase of stock ................................       (4,138)         (781)
    Dividends and distributions paid ...................       (6,542)       (5,366)
                                                             --------      --------
        Net cash (used in) provided by financing
          activities ...................................       (1,299)       31,347
                                                             --------      --------

Net change in cash and cash equivalents ................       (1,017)        1,484
Cash and cash equivalents, beginning of period .........       15,262         1,466
                                                             --------      --------
Cash and cash equivalents, end of period ...............     $ 14,245      $  2,950
                                                             ========      ========

Supplemental Information:
    Cash paid for interest .............................     $ 10,303      $  3,739
    Excess of liabilities over assets assumed on
        acquisition of partnership interests ...........     $      0      $     80
    OP Units redeemed for cash .........................     $  2,555      $  2,198
    Reclassification of real estate assets to
        hold for sale ..................................     $ 11,796      $      0
</TABLE>

See notes to consolidated financial statements.


                                       6
<PAGE>

                              GROVE PROPERTY TRUST

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               September 30, 1999

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 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. On March 14, 1997 the Company formed an operating  partnership
    (the "Operating  Partnership") to serve as the vehicle for the consolidation
    of ownership and control of the Company's operations and assets.

2.  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  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, 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.

3.  MORTGAGE NOTES PAYABLE
--------------------------

    Total mortgage notes payable of $183.2 million includes a fair value step up
    of $8.4 million.  The contractual  principal amount  outstanding of mortgage
    notes payable is $174.8  million.  The $8.4 million step up relates to $47.3
    million of above  market  interest  rate  mortgages,  which were  assumed in
    connection with the purchase of the 20 apartment communities in October 1998
    through  December 1998 (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  market  interest rate at  acquisition of 7.0%. 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.

    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).

    On June 29, 1999,  the Company  obtained a $7.6 million  ten-year  term loan
    with a  lender.  The net  proceeds  of the loan were  used to  refinance  an
    existing  $4.0 million loan and the  remaining  net proceeds of $3.6 million
    were used to repay borrowings under the Company's Revolving Credit Facility.

    On August 12, 1999, the Company  obtained a $26.3 million ten-year term loan
    with a lender.  The net  proceeds of the loan were used to repay  borrowings
    under the Company's Revolving Credit Facility.

    As of September 30, 1999, the Company's  weighted  average  interest rate on
    its long-term debt is 7.8% and its weighted average maturity is 10.5 years.


                                       7
<PAGE>


    Mortgage  notes  payable  consist of the following at September 30, 1999 (in
    thousands):

            Amortizing first mortgage notes        $120,247
            Interest only first mortgage notes       63,000
                                                   --------
                                                   $183,247
                                                   ========

    The amortizing  first mortgage notes have fixed interest rates between 6.19%
    and  12.47%.  These  notes  mature  between  the years 2000 and 2031 and are
    collateralized by thirty-three of the properties with an aggregate  carrying
    amount of approximately  $165.3 million as of September 30, 1999. Certain of
    these notes are  partially  guaranteed  by certain  executive  officers  and
    shareholders of the Company.

    There is one interest only first  mortgage  note.  This 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 $85.0 million as of September 30, 1999.

    Annual  principal  payments due as of September 30, 1999, are as follows (in
    thousands):

                          Period Ending September 30,
                          ---------------------------
                           1999           $     861
                           2000               3,403
                           2001               5,271
                           2002               3,538
                           2003               7,836
                           Thereafter       162,338
                                          ==========
                                          $ 183,247
                                          ==========

4.  REVOLVING CREDIT FACILITY
-----------------------------

    On August 13, 1999,  the Company  obtained a new revolving  credit  facility
    (the  "1999  Credit  Facility").  The 1999  Credit  Facility  decreased  the
    availability  of the  credit  line to  $40.0  million  from  $50.0  million,
    extended  the  maturity  to  August  2001  and  modified  certain  financial
    covenants.  The 1999 Credit  Facility  bears interest  payable  monthly at a
    floating  rate of 2.0%  above the 30,  60, or 90-day  LIBOR  rate.  The 1999
    Credit  Facility is  available  to fund  future  property  acquisitions  and
    working capital needs.

5.  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. On May 1, 1999, the Operating  Partnership issued
    314,846  Common  Units  valued  at $3.5  million  and $1.6  million  in cash
    payments  on the  Acquisition  Notes  Payable.  As of  September  30,  1999,
    Acquisition Notes Payable outstanding decreased $5.6 million to $7.3 million
    from $12.9  million as of December 31, 1998,  due to the payment above and a
    change in estimate.  The majority of the remaining Acquisition Notes Payable
    is  expected  to be  paid  on or  about  October  31,  1999  (consisting  of
    approximately  $3.2 million in cash and approximately $4.1 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  interests  in the  Operating  Partnership  will be increased by a
    corresponding amount.


                                       8
<PAGE>


6.  SHAREHOLDERS' EQUITY
------------------------

    The following table outlines the 1999 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 December 31, 1998 ...............................           8,639,659            3,768,775
Common  Units exchanged January 1999 through September 1999 ....              38,369              (38,369)
Common Shares repurchased January 1999 through September 1999 ..            (351,848)                --
Common Shares issued pursuant to stock options exercised in 1999              54,330                 --
Common  Units redeemed January 1999 through September 1999 .....                --               (202,359)
May 1999 payment of Acquisition Note Payable ...................                --                314,846
                                                                          ----------           ----------
Outstanding at September 30, 1999 ..............................           8,380,510            3,842,893
                                                                          ==========           ==========
         Ownership Percentage                                                  68.6%                31.4%
                                                                          ==========           ==========
</TABLE>


     Common Shares have been reserved for future issuance as follows:

        Common Units not owned by the Company (see above)     3,842,893
        Stock options issued ............................     1,072,040
        Additional stock options issuable ...............       441,355
                                                              ---------
                                                              5,356,288
                                                              =========

7.  SUBSEQUENT EVENT
--------------------

    On October 1, 1999, the Operating  Partnership  purchased for  approximately
    $1.0 million,  all the remaining  minority limited partner interests in five
    partnerships  (the  "Minority  Interests")  which  are  consolidated  in the
    Company's  financial  statements.  The  Minority  Interests  were  purchased
    through  the  issuance  of 10,683 OP units and with $.9 million in cash from
    working capital  reserves.  As a result,  beginning in the fourth quarter of
    1999,  there  will no  longer  be any  Minority  Interests  in  Consolidated
    Partnerships in the Company's financial statements.

    On November 1, 1999, the Company  prepaid The Abington Glen mortgage note of
    approximately $2.0 million.  This prepayment  resulted in the recognition of
    extraordinary income related to debt extinguishment of $0.1 million.

8.  SEGMENT REPORTING
---------------------

    The following table presents  information  about reported  segment profit or
    loss and segment assets. The Residential segment consists of 5,149 apartment
    units, the Subsidized Residential segment consists of 1,394 apartment units,
    and the Retail segment consists of 118,724 square feet. 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 September 30, 1999
                        -------------------------------------

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

<S>                                 <C>            <C>            <C>            <C>
Revenues ....................       $ 12,037       $  3,472       $    683       $ 16,192
Interest Expense ............       $  2,237       $    778       $    155       $  3,170
Depreciation and amortization       $  1,991       $    356       $    145       $  2,492
Segment Profit ..............       $  2,950       $  1,143       $    259       $  4,352
Segment Assets ..............       $244,284       $ 55,339       $ 18,983       $318,606
FFO .........................       $  4,910       $  1,499       $    401       $  6,810
</TABLE>



                                       9
<PAGE>



<TABLE>
                         Three Months Ended September 30, 1998
                         -------------------------------------

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

<S>                                 <C>            <C>            <C>            <C>
Revenues ....................       $  8,627       $      0       $    698       $  9,325
Interest Expense ............       $  1,383       $      0       $    141       $  1,524
Depreciation and amortization       $  1,417       $      0       $    132       $  1,549
Segment Profit ..............       $  1,928       $      0       $    267       $  2,195
Segment Assets ..............       $174,785       $      0       $ 17,937       $192,722
FFO .........................       $  3,299       $      0       $    396       $  3,695
</TABLE>


<TABLE>
                         Nine Months Ended September 30, 1999
                         ------------------------------------

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

<S>                                 <C>            <C>            <C>            <C>
Revenues ....................       $ 35,155       $ 10,435       $  2,010       $ 47,600
Interest Expense ............       $  6,134       $  2,384       $    297       $  8,815
Depreciation and amortization       $  5,826       $  1,074       $    433       $  7,333
Segment Profit ..............       $  8,287       $  3,427       $    881       $ 12,595
Extraordinary income ........       $      0       $    324       $      0       $    324
Segment Assets ..............       $244,284       $ 55,339       $ 18,983       $318,606
FFO .........................       $ 13,975       $  4,177       $  1,303       $ 19,455
</TABLE>


<TABLE>
                          Nine Months Ended September 30, 1998
                          ------------------------------------

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

<S>                                 <C>            <C>            <C>            <C>
Revenues ....................       $ 23,504       $      0       $  1,767       $ 25,271
Interest Expense ............       $  2,723       $      0       $    351       $  3,074
Depreciation and amortization       $  3,642       $      0       $    341       $  3,983
Segment Profit ..............       $  5,059       $      0       $    647       $  5,706
Extraordinary expense .......       $  1,173       $      0       $      6       $  1,179
Segment Assets ..............       $174,785       $      0       $ 17,937       $192,722
FFO .........................       $  9,713       $      0       $    987       $ 10,700
</TABLE>


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

<TABLE>
<CAPTION>
                                            For the Three Months Ended   For the Nine Months Ended
                                                   September 30,               September 30,
                                                1999          1998          1999          1998
                                                ----          ----          ----          ----
<S>                                           <C>           <C>           <C>           <C>
Revenues
--------

Total revenues for reportable segments ..     $ 16,192      $  9,325      $ 47,600      $ 25,271
Other revenues ..........................          121           136           359           431
                                              --------      --------      --------      --------
Total consolidated revenues .............     $ 16,313      $  9,461      $ 47,959      $ 25,702
                                              ========      ========      ========      ========


Profit or Loss
--------------

Total profit/loss for reportable segments     $  4,352      $  2,195      $ 12,595      $  5,706
Other profit or loss ....................       (2,415)         (462)       (7,801)         (557)
                                              --------      --------      --------      --------
Income before extraordinary expense and
  minority interests ....................     $  1,937      $  1,733      $  4,794      $  5,149
                                              ========      ========      ========      ========
</TABLE>



                                       10
<PAGE>


<TABLE>
<CAPTION>
                                    For the Three Months Ended      For the Nine Months Ended
                                          September 30,                   September 30,
                                      1999             1998            1999           1998
                                      ----             ----            ----           ----
<S>                                 <C>             <C>             <C>             <C>
FFO
---
FFO for reportable segments .       $  6,810        $  3,695        $ 19,455        $ 10,700
Other FFO ...................         (2,409)           (424)         (7,399)         (1,623)
                                    --------        --------        --------        --------
FFO before minority interests       $  4,401        $  3,271        $ 12,056        $  9,077
                                    ========        ========        ========        ========

Assets
------

Total assets for reportable segments                                $318,606        $192,722
Other Assets.................                                          8,617           5,290
                                                                    --------        --------
Total consolidated assets                                           $327,223        $198,012
                                                                    ========        ========
</TABLE>


                                       Three Months Ended September 30, 1999
                                       -------------------------------------
     Other Significant Items
     -----------------------
                                         Segment                Consolidated
                                         Totals     Non-segment    Totals
                                         ------     -----------    ------

     Interest expense ............       $3,170       $  455       $3,625
     Depreciation and amortization       $2,492       $  121       $2,613


                                       Three Months Ended September 30, 1998
                                       -------------------------------------
     Other Significant Items
     -----------------------
                                         Segment                Consolidated
                                         Totals     Non-segment    Totals
                                         ------     -----------    ------
     Interest expense ............       $1,524       $  142       $1,666
     Depreciation and amortization       $1,549       $   65       $1,614


                                        Nine Months Ended September 30, 1999
                                        ------------------------------------
     Other Significant Items
     -----------------------
                                        Segment                Consolidated
                                        Totals     Non-segment    Totals
                                        ------     -----------    ------

     Interest expense ............      $ 8,815       $ 1,658       $10,473
     Depreciation and amortization      $ 7,333       $   348       $ 7,681


                                        Nine Months Ended September 30, 1998
                                        ------------------------------------
     Other Significant Items
     -----------------------
                                        Segment                Consolidated
                                        Totals     Non-segment    Totals
                                        ------     -----------    ------

     Interest expense ............       $3,074       $  982       $4,056
     Depreciation and amortization       $3,983       $  111       $4,094



                                       11
<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, 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, the twenty properties acquired on March 14, 1997, the fourteen
properties  subsequently acquired in 1997 (collectively referred to as the "1997
Properties"),  and the  twenty-seven  properties  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  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 nine months ended  September  30,
--------------------------------------------------------------------------------
1999 and 1998.
--------------

Total rental  revenues  increased  $21,656,000 to $46,786,000  from  $25,130,000
during  the  nine  months  ended   September   30,  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").

Property  management income decreased  $140,000 to $201,000 from $341,000 during
the nine months  ended  September  30,  1999,  as compared to the  corresponding
period in 1998.  The  decrease  is due to the sale of two  properties  that were
affiliated with the Company.

Other property related income and interest income increased $741,000 to $972,000
from  $231,000  during the nine months ended  September 30, 1999, as compared to
the  corresponding  period  in  1998.  The  increase  is  primarily  due  to the
operations of the Recent Acquisitions.

The  properties  experienced  an  increase  in rental  rates and an  increase in
occupancy.  The weighted  average monthly rental rates increased to $787 for the
nine  months  ended  September  30,  1999 from $691 for the same period in 1998.
Economic occupancy increased to an aggregate weighted average occupancy of 96.2%
for the nine months ended September 30, 1999 from an aggregate  weighted average
occupancy of 95.3% for the same period in 1998.

Property operating expenses increased  $8,888,000 to $17,488,000 from $8,600,000
during  the  nine  months  ended   September   30,  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  $1,770,000 to $4,331,000 from $2,561,000 during the
nine months ended September 30, 1999, as compared to the corresponding period in
1998. The increase is due primarily to the Recent Acquisitions.

Interest expense increased  $6,417,000 to $10,473,000 from $4,056,000 during the
nine months ended September 30, 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  $1,950,000 to $3,192,000  from
$1,242,000  during the nine months ended  September 30, 1999, as compared to the
corresponding  period in 1998.  This  increase is primarily due to the increased
costs associated with the executive stock bonus plan.

Depreciation and amortization increased $3,587,000 to $7,681,000 from $4,094,000
during  the  nine  months  ended   September   30,  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 $553,000 to $3,235,000
from $3,788,000  during the nine months ended September 30, 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 increased borrowings
and increased general and administrative costs.

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).


                                       12
<PAGE>


In August  1999 the  Company  obtained  the new 1999  Credit  Facility  of $40.0
million and paid in full the 1998 Credit Facility.  This transaction resulted in
the recognition of extraordinary expense related to debt extinguishment of $0.16
million  ($0.34  million of finance costs offset by $0.18 million of accumulated
amortization).

Results of  operations  of the Company for the three months ended  September 30,
--------------------------------------------------------------------------------
1999 and 1998.
--------------

Total rental revenues increased $6,666,000 to $15,918,000 from $9,252,000 during
the three months ended  September  30,  1999,  as compared to the  corresponding
period in 1998.  The  increase  is  primarily  due to the  operations  of the 20
apartment  communities  purchased  in October 1998  through  December  1998 (the
"McNeil Portfolio").

Property management income decreased $47,000 to $61,000 from $108,000 during the
three months ended September 30, 1999, as compared to the  corresponding  period
in 1998. The decrease is due to the sale of two properties  that were affiliated
with the Company.

Other property related income and interest income increased $233,000 to $334,000
from $101,000  during the three months ended  September 30, 1999, as compared to
the  corresponding  period  in  1998.  The  increase  is  primarily  due  to the
operations of the McNeil Portfolio.

The  properties  experienced  an  increase  in rental  rates and an  increase in
occupancy.  The weighted  average monthly rental rates increased to $797 for the
three  months  ended  September  30, 1999 from $697 for the same period in 1998.
Economic occupancy increased to an aggregate weighted average occupancy of 96.3%
for the three months ended September 30, 1999 from an aggregate weighted average
occupancy of 96.1% for the same period in 1998.

Property operating  expenses increased  $2,523,000 to $5,583,000 from $3,060,000
during  the  three  months  ended   September  30,  1999,  as  compared  to  the
corresponding period in 1998. The increase is primarily due to the operations of
the McNeil Portfolio.

Real estate taxes  increased  $523,000 to $1,468,000  from  $945,000  during the
three months ended September 30, 1999, as compared to the  corresponding  period
in 1998. The increase is due primarily to the McNeil Portfolio.

Interest expense  increased  $1,959,000 to $3,625,000 from $1,666,000 during the
three months ended September 30, 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 McNeil Portfolio.

General  and  administrative  expenses  increased  $644,000 to  $1,087,000  from
$443,000  during the three months ended  September  30, 1999, as compared to the
corresponding  period in 1998.  This  increase is primarily due to the increased
costs associated with the executive stock bonus plan.

Depreciation and amortization  increased  $999,000 to $2,613,000 from $1,614,000
during  the  three  months  ended   September  30,  1999,  as  compared  to  the
corresponding period in 1998. This increase is related to the McNeil Portfolio.

The Company's income before  extraordinary  items decreased $1,000 to $1,288,000
from $1,289,000 during the three months ended September 30, 1999, as compared to
the corresponding period in 1998.

Same Community Analysis
-----------------------

For the nine months ended September 30, 1999 and 1998.
------------------------------------------------------

The Same Community analysis includes 35 apartment  communities (3,523 units, 79%
in Connecticut, 17% in Massachusetts,  and 4% in Rhode Island) 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 4.4% to
$742 from $711 and the economic occupancy rate increased to 96.3% from 95.3% for
the nine months ended  September  30, 1999 versus the first nine months of 1998.
Overall,  Same Community net operating  income  increased 7.4% to $13.43 million
from  $12.50  million for the nine months  ended  September  30, 1999 versus the
first nine months of 1998. Net operating income increased due to a 6.0% increase
in revenues offset by a 4.0% increase in operating expenses.  Revenues increased
due to the increase in rental rates and occupancy.  Operating expenses increased
due to higher snow plowing, landscaping, repairs and maintenance expenses.



                                       13
<PAGE>


The following table summarizes Same Community operations:

                                         --------------------
                                          Nine Months Ended
                                            September 30,        %
                                         --------------------
                                            1999       1998    Change
                                            ----       ----    ------
Economic Occupancy                         96.3%       95.3%    1.1%
                                         =====================
Average monthly rental rate per unit      $  742       $ 711    4.4%
                                         =====================
Revenues (millions)                       $22.66      $21.37    6.0%
Operating expenses (millions)               9.23        8.87    4.0%
                                         ----------------------------
    Net operating income (millions)        $13.43     $12.50    7.4%
                                         ============================

For the three months ended September 30, 1999 and 1998.
-------------------------------------------------------

On a Same  Community  basis,  the  weighted  average  monthly  rental  rate  per
apartment  increased  4.6% to $750 from  $717 and the  economic  occupancy  rate
increased  to 96.7%  from 96.1% for the third  quarter of 1999  versus the third
quarter of 1998. Overall,  Same Community net operating income increased 7.1% to
$4.71  million from $4.39 million for the third quarter of 1999 versus the third
quarter of 1998.  Net  operating  income  increased  due to a 6.4%  increase  in
revenues  offset by a 5.3% increase in operating  expenses.  Revenues  increased
primarily  due to increases in rental rates and  occupancy.  Operating  expenses
increased  primarily due to higher payroll,  repairs and maintenance,  and flood
damage expenses due to unusually high rain fall at one property.

The following table summarizes Same Community operations:

                                         --------------------
                                          Three Months Ended
                                            September 30,        %
                                         --------------------
                                           1999        1998    Change
                                           ----        ----    ------
Economic Occupancy                         96.7%       96.1%    0.6%
                                         =====================
Average monthly rental rate per unit      $  750      $  717    4.6%

                                         =====================
Revenues (millions)                       $ 7.73      $ 7.26    6.4%
Operating expenses (millions)               3.02        2.87    5.3%
                                         ----------------------------
    Net operating income (millions)       $ 4.71      $ 4.39    7.1%
                                         ============================

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

Cash and cash  equivalents  totaled  $14,245,000  as of September 30, 1999.  The
Company's  ratio of long-term debt  including the 1999 Credit  Facility to total
market  capitalization  on September 30, 1999 was, 55.0%,  based on total market
capitalization  of $358.27 million,  based on 12,223,403 Common Units and Common
Shares,  valued at $13.1875 per  share/unit  (the closing price on September 30,
1999), plus $197.07 million of long-term debt including the 1999 Credit Facility
and excluding the fair value step up of $8.42 million.

On September 15, 1999, the Company  declared a $0.18 per share  dividend,  which
was paid on October 15, 1999. The dividends  declared during the period resulted
in a 50.6% pay out of funds from operations for the three months ended September
30, 1999.

In August 1999, the Company  entered into the 1999 Credit Facility with its bank
and retired the  Company's  prior  revolving  credit  facility.  The 1999 Credit
Facility  decreased  the  availability  of the credit line to $40.0 million from
$50.0  million,  extended  the  maturity  to August  2001 and  modified  certain
financial covenants.  The 1999 Credit Facility bears interest payable monthly at
a floating rate of 2.0% above the 30, 60, or 90-day LIBOR rate.  The 1999 Credit
Facility is available to fund future property  acquisitions  and working capital
needs.

In August 1999,  the Company  entered into new  long-term  debt in the amount of
$26.3  million.  This  long-term debt matures in August 2009, is secured by five
apartment  communities,  and requires monthly payments of principal and interest
based upon a 30 year amortization  schedule and has a fixed annual interest rate
of  7.61%.  The net  proceeds  from the  loan  were  used to  repay  outstanding
borrowings under the Company's prior revolving 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


                                       14
<PAGE>


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.  On May
1, 1999, the Company issued 314,846  Operating  Partnership Units valued at $3.5
million and made $1.6 million in cash payments on the Acquisition Notes Payable.
As of September 30, 1999,  Acquisition Notes Payable outstanding  decreased $5.6
million to $7.3 million from $12.9  million as of December 31, 1998,  due to the
payment  above  and  a  change  in  estimate.  The  majority  of  the  remaining
Acquisition  Notes  Payable is expected to be paid within the next twelve months
(consisting of approximately $3.2 million in cash and approximately $4.1 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.

During 1998,  the Board of Trustees  authorized  the Company to repurchase up to
400,000  Common  Shares.  In the first  quarter of 1999,  the Board of  Trustees
authorized the Company to purchase up to an additional 500,000 Common Shares. In
the third  quarter of 1999,  the Board of  Trustees  authorized  the  Company to
purchase up to an additional  500,000 Common Shares.  Purchases of Common Shares
and Common Units presented for redemption  which are redeemed for cash are being
funded from operating cash flow and the Company's  1999 Credit  Facility.  Since
beginning its share repurchase program and through October 29, 1999, the Company
has redeemed  456,606  Common  Units for cash at an average  price of $11.32 per
share and  repurchased  864,927  Common Shares at an average price of $11.39 per
share.

The Company intends to meet its short-term  liquidity  requirements through cash
flow provided by operations and borrowings under the 1999 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 properties, the selling of additional equity interests in the
Company, non-distributed Funds From Operations, the issuance of debt securities,
funds from the 1999 Credit  Facility,  and  exchanging  Common  Shares or Common
Units for properties or interests in properties.

Acquisitions/Dispositions
-------------------------

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.

The  Company  has  recently  identified  6  properties  in  its  portfolio  (395
apartments) that no longer meet its long-term strategic criteria. The properties
are located in Connecticut.  Four of the identified  properties (313 apartments)
are currently  under contract for sale. It is the Company's goal to finalize the
sale of these four properties by the end of the fourth quarter of 1999.

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
costs of $27,200  specifically related to Year 2000 compliance and anticipates $
25,000  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:



                                       15
<PAGE>



<TABLE>
<CAPTION>
-------------------- -------------------- -------------------- -------------------- --------------------
                         Assessment          Remediation            Testing           Implementation
-------------------- -------------------- -------------------- -------------------- --------------------

<S>                  <C>                  <C>                  <C>                  <C>
Information          100% Complete        90% Complete         90% Complete         90% Complete
Technology
                                          Expected             Expected             Expected
                                          completion date,     completion date,     completion date,
                                          November 1999        November 1999        November 1999
-------------------- -------------------- -------------------- -------------------- --------------------
Operating
Equipment with       100% Complete        100% Complete        100% Complete        100% Complete
Embedded Chips or
Software
-------------------- -------------------- -------------------- -------------------- --------------------

3rd Party            90% Complete         90% Complete         90% Complete         90% Complete
-------------------- -------------------- -------------------- -------------------- --------------------
</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.

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  to $4.4  million  from $3.2  million for the three  months ended
September  30, 1999 and 1998,  respectively.  Dividends  declared  for the three
months ended September 30, 1999 were $0.18 per share, representing 50.6% of FFO,
while  dividends  declared for the three months  ended  September  30, 1998 were
$0.17 per share representing 59.1% of FFO.

FFO  increased  to $11.9  million  from $9.0  million for the nine months  ended
September  30,  1999 and 1998,  respectively.  Dividends  declared  for the nine
months ended September 30, 1999 were $0.54 per share, representing 55.6% of FFO,
while dividends declared for the nine months ended September 30, 1998 were $0.51
per share representing 64.6% of FFO.

FFO was calculated as follows (in thousands):
<TABLE>
<CAPTION>
                                                      For the Three Months Ended    For the Nine Months Ended
                                                            September 30,                 September 30,
                                                          1999           1998          1999            1998
                                                          ----           ----          ----            ----
<S>                                                     <C>            <C>            <C>            <C>
Income before loss on sale, extraordinary items,
    and minority interests .....................        $ 1,937        $ 1,733        $ 4,794        $ 5,149
Real estate depreciation and amortization ......          2,464          1,538          7,262          3,928
                                                        -------        -------        -------        -------
Funds from operations before minority interests           4,401          3,271         12,056          9,077
Minority interests in consolidated partnerships              38             32            110             95
                                                        -------        -------        -------        -------
FFO ............................................        $ 4,363        $ 3,239        $11,946        $ 8,982
                                                        =======        =======        =======        =======
</TABLE>


                                       16
<PAGE>



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.

"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.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The  Company is exposed to changes in  interest  rates  primarily  from its 1999
Credit  Facility.  A  hypothetical  100 basis point  adverse move  (increase) in
interest rates along the entire interest rate yield curve would adversely affect
the net fair value of all interest sensitive  financial  instruments by $222,500
at September 30, 1999.


                                       17
<PAGE>


PART II.  OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

NONE

ITEM 2:  CHANGE IN SECURITIES AND USE OF PROCEEDS

On September 1, 1999,  the Company  issued 50,000 Common Shares valued at $10.05
per Common  Share.  The total value of the Common Shares was  approximately  $.5
million.

The issuance of the Common Shares referred to in the preceding paragraph was not
registered  under  the  Securities  Act of 1933  in  reliance  on the  exemption
contained  in  Rule  506  thereunder  on  basis  that  each  purchaser  in  such
transaction was an accredited investor.

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

      4         Revolving Credit  Agreement among Grove  Operating,  L.P., Grove
                Property  Trust and  BankBoston,  N.A. and the Other Banks Which
                May Become Parties to the Agreement with  BankBoston,  as Agent,
                and BankBoston Robertson Stephens, as Arranger,  and First Union
                National Bank, as Syndication Agent, dated as of August 11, 1999

     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 10, 1999                    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
          --------------                -----------

               4              Revolving  Credit Agreement among Grove Operating,
                              L.P.,  Grove Property Trust and  BankBoston,  N.A.
                              and the Other  Banks  Which May Become  Parties to
                              the  Agreement  with  BankBoston,  as  Agent,  and
                              BankBoston  Robertson Stephens,  as Arranger,  and
                              First Union National  Bank, as Syndication  Agent,
                              dated as of August 11, 1999

              27              Financial Data Schedule