U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                   Form 10-QSB



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

                For the quarterly period ended September 30, 1996

                                       OR

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


                           Commission file No. 1-13080

                    GROVE REAL ESTATE ASSET TRUST (Exact name
              of small business issuer as specified in its charter)


                Maryland                              06-1391084
        (State of incorporation)          (I.R.S. Employer Identification No.)

598 Asylum Avenue, Hartford, Connecticut                06105
      (Address of principal offices)                  (Zip Code)

                                               (860) 520-4789
                           (Issuer's telephone number)

     Check  whether  the issuer (1) filed all  reports  required  to be filed by
Section 13 or 15 (d) of the  Exchange Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing requirements for the past 90 days. Yes: X No:

          525,000 common shares, $.01 par value, were outstanding as of
                               October 11, 1996.



                                       1
<PAGE>


                                       GROVE REAL ESTATE ASSET TRUST

                                                Form 10-QSB
                                                   Index

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

                                                                           Page

Part I:        Financial Information                                         3

Item 1:        Financial Statements

               Balance Sheets of Grove Real Estate Asset Trust as of            
               September 30, 1996 and December 31, 1995                      3

               Income Statements of Grove Real Estate Asset Trust for  the
               nine months ended September 30, 1996 and September 30, 1995   4

               Income Statements of Grove Real Estate Asset Trust for the
               three months ended September 30, 1996 and September 30, 1995  5 

               Statement of Shareholders' Equity of Grove Real Estate Asset 
               Trustfor the nine months ended September 30, 1996             6

               Statements of Cash flows of Grove Real Estate Asset  
               Trust for the nine months ended September 30, 1996 and 
               September 30, 1995                                            7 
  
               Notes to Financial Statements                              8-10

Item 2:        Management's Discussion and Analysis of Financial 
               Condition and Results of Operations                     11 - 14

Part II:       Other Information                                            15

Item 1:        Legal proceedings                                            15

Item 2:        Changes in Securities                                        15

Item 3:        Submission of Matters to a Vote of Security Holders          15

Item 4:        Other Information                                            15

Item 5:        Exhibits and Reports on Form 8-K                             15

Signatures                                                                  15

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements


                                       2
<PAGE>

                          GROVE REAL ESTATE ASSET TRUST
                                  BALANCE SHEETS
                                                   September 30,    December 31,
                                                       1996            1996
                                                   (Unuadited)       (Audited)
                                                   -----------       ---------
                                      ASSETS
Real estate assets:
        Land ....................................   $    20,293        493,823
        Buildings and improvements ..............     8,494,112      4,658,438
        Furniture, fixtures and equipment .......       347,336        240,438
                                                        -------        -------
                                                      9,761,741      5,392,699
        Less - accumulated depreciation .........      (958,017)      (694,215)
                                                       --------       -------- 
Net real estate assets ..........                     8,803,724      4,698,484
Cash and cash equivalents .......................       441,632        383,725
Cash - resident security deposits ...............       156,592         99,973
Deferred charges, net of accumulated amortization
     of $4,247 and $11,736, respectively ........        83,222         56,279
Other assets ....................................        62,069          2,712
                                                         ------          -----
                                                
Total assets ...................................   $  9,537,239      5,241,173
                                                      =========      =========
                                                    
                       LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
        Mortgage note payable ..................... $   5,675,478    1,190,031
        Accounts payable, accrued expense and other        61,189       31,304
        Due to affiliates .........................         2,532       97,528
        Resident security deposits ................       156,592       99,973
        Dividends payable .........................       120,750      119,438
                                                          -------      ------- 
Tottal liabilities .................................    6,016,541    1,538,273
                                                        ---------    ---------
                                                                
Commitments and subsequent event ..................          --             --

Shareholders' equity:
        Preferred shares, $.01 par value per share,
            4,000,000 shares authorized; no shares
            issued or outstanding .................          --             --
        Common shares, $.01 par value per share,
            10,000,000 shares authorized; 525,000
            shares issued and outstanding ........         5,250         5,250
        Additional paid-in capital ................    3,913,176     3,913,176
        Distributions in excess of earnings .......     (387,728)     (215,526)
                                                         --------      ------- 
Total equity ......................................    3,530,698     3,702,900
                                                        ---------    ---------
Total liabilities and shareholders' equity ........ $  9,537,239     5,241,173
                                                        =========    =========

                             See accompanying notes
                                       3
<PAGE>


                          GROVE REAL ESTATE ASSET TRUST
                                INCOME STATEMENTS
                                   (Unaudited)


                                       For the Nine Months Ended
                                    --------------------------------

                                         Sept. 30,    Sept. 30,
                                            1996         1995
                                            ----         ----
Revenues:
    Rental income ....................  $1,521,188     961,423
    Interest and other income ........      28,015      22,395
                                            ------      ------
                                                   
        Total revenues ...............   1,549,203     983,818
                                         ---------     -------
                                                     


Expenses:
    Property operating and maintenance     485,361     296,532
    Real estate taxes ................     155,007     110,858
    Related party management fees ....      79,883      49,874
    General and administrative .......      55,337      46,329
                                            ------      ------
                                                   
        Total expenses ...............     775,588     503,593
                                           -------     -------
                                                  
                                           773,615     480,225

Interest expense .....................     291,551      63,588
Depreciation and amortization ........     293,328     161,686
                                           -------     -------
                                                 
            Net income ...............  $  188,736      254,951
                                           =======      =======
                                                   


Net income per share .................  $     0.36        0.49
                                              ====        ====
                                                  

Weighted average number of shares ....     525,000     525,000
                                           =======     =======


                             See accompanying notes

                                   

                                       4
<PAGE>


                          GROVE REAL ESTATE ASSET TRUST
                                INCOME STATEMENTS
                                   (Unaudited)


                                               For the Three Months Ended
                                               --------------------------

                                                Sept. 30,       Sept. 30,
                                                  1996            1995
                                                  ----            ----


Revenues:
    Rental income                                $520,362        $322,069
    Interest and other income                       8,286           8,146
                                                    -----           -----
                                          
        Total revenues                            528,648         330,215
                                                  -------         -------
                                        


Expenses:
    Property operating and maintenance           $139,292         106,498
    Real estate taxes                              53,295          36,912
    Related party management fees                  27,289          16,619
    General and administrative                     14,886          10,024
                                                   ------          ------
                                          
        Total expenses                            234,762         170,053
                                                  -------         -------
                                          

                                                  293,886         160,162

Interest expense                                  102,347          21,354
Depreciation and amortization                      95,053          54,569
                                                   ------          ------
                                          
           Net income                            $ 96,486          84,239
                                                   ======          ======
                                

Net income per share                                $0.18           $0.16
                                                    =====           =====
                                   

Weighted average number of shares                 525,000         525,000
                                                  =======         =======

                             See accompanying notes


                                       5
<PAGE>


                          GROVE REAL ESTATE ASSET TRUST
                        STATEMENT OF SHAREHOLDERS' EQUITY
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
                                   (Unaudited)


                                                       Additional  Distributions
                                              Common     Paid-in    in Excess of
                                              Shares     Capital     Net Income
                                              ------     -------     ----------

Amounts at December 31, 1995 ............   $   5,250    3,913,176    (215,526)
        Net Income ......................                              188,736
        Declared dividends ..............                             (360,938)
                                              --------   ---------    -------- 
                                                                   

Amounts at September 30, 1996 (unaudited)   $   5,250    3,913,176    (387,728)
                                            =========    =========    ======== 

                             See accompanying notes

                                       6
<PAGE>


                          GROVE REAL ESTATE ASSET TRUST
                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                     For the Nine Months Ended
                                                     -------------------------
                                             
                                                        Sept. 30,    Sept. 30,
                                                          1996         1995
                                                          ----         ----
                                                 
Cash flows from operating activities:
      Net income ..................................... $188,736      254,951
      Adjustments to reconcile net income to net cash
      provided by operating activities:
            Depreciation and amortization ............  293,328      161,686
            Imputed interest - mortgage ..............   27,875       25,931
            Increase in other assets .................  (59,357)     (33,003)
            Increase (decrease) in accounts payable, 
              accrued expenses and other .............   29,885       (2,372)
                                                         ------       ------ 
                                                                 
Net cash provided by operating activities ............  480,467      407,193
                                                        -------      -------
                                                                 
Cash flows from investing activities:
Expenditures for building and improvements ...........  (67,635)     (37,624)
Expenditures for furniture, fixtures and equipment ...  (21,604)      (5,057)
                                                        -------       ------
Net cash provided by (used in) investing activities ..  (89,239)     (42,681)
                                                        -------      ------- 
Cash flows from financing activities:
      Proceeds from mortgage payable .................  220,197         --
      Financing costs ................................  (56,469)        --
      Repayment of mortgage payable ..................  (42,428)        --
      Repayment of notes payable to affiliates .......  (94,996)     (50,000)
      Dividends paid ................................. (359,625)    (353,063)
                                                       --------     -------- 
                                                                 
Net cash provided by (used in) financing activities .. (333,321)    (403,063)
                                                       --------     -------- 
                                                                
Net increase (decrease) in cash and cash equivalents .   57,907      (38,551)

Cash and cash equivalents, beginning of period .......  383,725      416,012
                                                        -------      -------
                                                                 
Cash and cash equivalents, end of period ............. $441,632      377,461
                                                       ========      =======
                                                                           
                             See accompanying notes
                                                  

                                       7
<PAGE>



                          GROVE REAL ESTATE ASSET TRUST

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


1.   FORMATION AND BUSINESS OF THE COMPANY

     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 four properties with a total of 257 residential
     apartments.  The Company  purchased three  properties on June 23, 1994 (the
     "Original Properties"),  and the fourth property ("Cambridge") was acquired
     for  $4,250,000  in  January  of  1996.  Cambridge  is  a  ninety-two  unit
     multifamily apartment complex located in Norwich, Connecticut

     These  statements  do not contain  all  information  required by  generally
     accepted  accounting  principles  to be included in a full set of financial
     statements.  In the  opinion  of  management,  the  accompanying  unaudited
     financial  statements  reflect  all the  adjustments  necessary  to present
     fairly the  financial  position  of the Company at  September  30, 1996 and
     results of operations  and its cash flows for the period then ended and the
     period ended  September  30, 1995.  These  unaudited  financial  statements
     should be read in  conjunction  with the audited  financial  statements and
     notes  contained in the Company's  Form 10-KSB for the year ended  December
     31,  1995.  Results  of  operations  for this  period  are not  necessarily
     indicative of results to be expected for the full year.

     Earnings per share is based on the weighted average number of common shares
     issued and outstanding from January 1, 1996 to September 30, 1996, and from
     January 1, 1995 to September 30, 1995,  which was equal to 525,000  shares.
     The  assumed  exercise of  outstanding  stock  options and  warrants is not
     dilutive and, therefore, is not included.



                                       8
<PAGE>



2.   MORTGAGE NOTES PAYABLE

     Mortgage  notes payable at September 30, 1996 and December 31, 1995 consist
     of the following:


                                     September 30, 1996      December 31, 1995
       Southington Apartments note      $   1,217,906         $   1,190,031
       Cambridge Estates note               4,457,572                     0
                                            ---------                    --
                                        $   5,675,478         $   1,190,031
                                            =========             =========

     The  mortgage  note  on the  Southington  Apartments  property  located  in
     Southington,  Connecticut, one of the Original Properties, which has a face
     amount of $1,250,000,  has an imputed interest rate of 7.25% due in monthly
     interest  payments of $4,167  through June 1997 and monthly  principal  and
     interest  payments of $8,527 through July 2013. The note is  collateralized
     by the  Southington  Apartments  property  and 15% of the  face  amount  is
     guaranteed by certain executive officers and shareholders of the Company.

     The Cambridge note payable had an original principal balance of $4,500,000.
     Monthly  principal  and  interest  payments  of $31,920  based on a 25-year
     amortization  table are due  through  January  2006.  Interest  is fixed at
     7.04%.  The  mortgage is secured by a blanket  first  mortgage  lien on the
     Cambridge  property,  and the two  other  Original  Properties  located  in
     Hamden, Connecticut.


3.   STOCK OPTIONS AND WARRANTS

     The Company has  adopted  the 1994 Share  Option Plan (the  "Plan") and has
     reserved  100,000  shares for  issuance  under the Plan.  The  Company  has
     granted options to purchase 50,000 shares to the executive officers with an
     exercise  price of $11.125 per share.  The options will expire on the tenth
     anniversary  of the  closing  of the IPO.  Additionally,  the  Company  has
     granted each Trust Manager of the Company who is not an employee upon their
     election as a Trust Manager a non-qualified  stock option to purchase 2,000
     shares for a total of 6,000  shares with an  exercise  price of $11.125 per
     share.  At  the  time  of  each  annual  meeting  of   shareholders,   each
     non-employee  Trust Manager  receives an option to purchase 1,000 shares at
     the fair market value of the shares on the date of grant. All options which
     have been granted under the Plan become exercisable in increments of 33 1/3
     % per year on each of the first three  anniversaries  of the date of grant.
     At September  30, 1996,  no options had been  exercised.  At September  30,
     1996, 62,000 options are outstanding, of which 38,334 are exercisable.

     At September  30, 1996,  warrants to purchase an aggregate of 40,000 common
     shares are exercisable at $13.35 per share and expire in June 1999.




                                       9
<PAGE>



4.   RELATED PARTY TRANSACTIONS

     Due to Affiliates

     Amounts due to  affiliates  at  September  30, 1996 and  December  31, 1995
     consist of the following:
 
                                  September 30, 1996          December 31, 1995
                                  ------------------          -----------------
     Grove Investment Group          $      0                   $   70,457
     Grove  Property  Services, LP      2,532                       14,890
     Grove Development Corp.                0                       12,181
                                        -----                      -------
     Total due to affiliates         $  2,532                   $   97,528
                                        =====                       ======


     The amount due to the Grove  Investment  Group ("GIG")  relates to advances
     made by GIG to GREAT to fund  expenses  incurred by the Company  related to
     the IPO and to fund initial  organization costs. The Company repaid $50,000
     of note payable  balance  during the second  quarter of 1995 and repaid the
     remaining balance in January 1996. No interest was paid.

     Management Fee

     Grove  Property  Services  Limited  Partnership,  an  affiliate  of  GREAT,
     provides  all of the  operating  and  support  functions  requisite  to the
     operation of properties owned by GREAT,  including building  management and
     leasing, to the Company. The management agreement provides for a management
     fee equal to 5% of gross rental revenues, as defined. The agreement expires
     on June 30, 1997.

5.   SUPPLEMENTAL CASH FLOW INFORMATION

     Cash paid for interest expense was $278,551 and $63,431 for the nine months
     ended  September  30, 1996 and 1995,  respectively.  Cash paid for interest
     expense was $102,335 and $21,310 for the three months ended  September  30,
     1996 and 1995,  respectively.  On January 12,  1996 the  Company  purchased
     Cambridge  for  $4,250,000,  which was  financed  with a  $4,500,000  first
     mortgage from a bank.


                                       10
<PAGE>




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

Overview

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

The results of operations for the nine months ended September 30, 1996 and three
months ended  September 30, 1996 include the three  multifamily  properties (the
"Original  Properties")  that GREAT has owned since its  inception  and a fourth
property  ("Cambridge")  that GREAT  acquired on January 12, 1996.  The Original
Properties are comprised of 165 residential  apartment  units, in the aggregate,
two of  which  are  located  in  Hamden,  Connecticut  and  one of  which  is in
Southington,  Connecticut.  Cambridge is a ninety-two unit multifamily apartment
complex located in Norwich,  Connecticut. The results of operations for the nine
months ended  September  30, 1995 and the three months ended  September 30, 1995
include the three Original Properties.

Results of Operations

Results of operations of GREAT for the nine months ended  September 30, 1996 and
September 30, 1995.

The Original  Properties  experienced  increases in rental rates which increased
revenues.  The Original  Properties  weighted  average rental rates increased to
$676 for the nine months ended  September 30, 1996 from $658 for the nine months
ended  September  30,  1995.  Physical  occupancy  for the  Original  Properties
remained  at an  aggregate  weighted  average  occupancy  of 97.37% for the nine
months ended September 30, 1996 and September 30, 1995.  Physical  occupancy for
the Original Properties decreased to 97.58% at September 30, 1996 from 98.79% at
September 30, 1995.  The weighted  average  physical  occupancy for the Original
Properties  and  Cambridge  for the Nine  months  ended  September  30, 1996 was
97.58%.  Physical occupancy for the Original Properties and Cambridge was 98.44%
at September 30, 1996.

Rental and other income  increased  $565,385 from $983,818 to $1,549,203  during
the Nine months  ended  September  30,  1996,  as compared to the  corresponding
period in 1995.  Approximately  $537,000 of the  increase is due to operation of
Cambridge, and the remainder primarily due to the increases in rental rates.

Property operating and maintenance  expenses increased $188,829 from $296,532 to
$485,361  during the nine months ended  September  30, 1996,  as compared to the
corresponding period in 1995.  Approximately $170,000 of the increase is due the
acquisition of the Cambridge  property.  Additionally,  the Original  Properties
experienced an increase in operating and  maintenance  experiences due primarily
to the sever winter  experienced in the New England area in 1996 compared to the
mild winter experienced in 1995.




                                       11
<PAGE>

General and  administrative  expenses  increased  $9,008 from $46,329 to $55,337
during  the  nine  months  ended   September   30,  1996,  as  compared  to  the
corresponding  period in 1995.  The increase is primarily due to the  additional
expenses  related to the  acquisition  of the  Cambridge  Property and increased
overhead expenses.

Real estate taxes  increased  $44,149 from $110,858 to $155,007  during the nine
months ended  September  30, 1996,  as compared to the  corresponding  period in
1995.  Related party management fees increased  $30,009 from $49,874 to $79,883.
These increases were due primarily to the acquisition of the Cambridge property.

Interest  expense  increased  $227,963 from $63,588 to $291,551  during the nine
months ended  September  30, 1996,  as compared to the  corresponding  period in
1995.  The  increase is due to the  $4,500,000  mortgage  note  payable  used to
finance the acquisition of the Cambridge property. Depreciation and amortization
increased $131,642 primarily due to the acquisition of the Cambridge property.

The Company's net income decreased  $66,215 from $254,951 to $188,736 during the
nine months ended September 30, 1996, as compared to the corresponding period in
1995.  Approximately  $40,000 of the decrease is due to the loss  experienced by
the Cambridge  property.  The decrease in net income for the Original properties
of  approximately  $26,000 was due to the  increase in  property  operating  and
maintenance expenses along with increases in other expenses.

Results of operations of GREAT for the three months ended September 30, 1996 and
September 30, 1995.

The Original  Properties  experienced  increases in rental rates which increased
revenues.  The Original  Properties  weighted  average rental rates increased to
$683 for the  three  months  ended  September  30,  1996 from $662 for the three
months ended September 30, 1995.  Physical occupancy for the Original Properties
decreased to an  aggregate  weighted  average  occupancy of 95.76% for the three
months ended September 30, 1996 from an aggregate weighted average of 98.38% for
the three  months  ended  September  30, 1995.  The  weighted  average  physical
occupancy for the Original  Properties  and Cambridge for the three months ended
September 30, 1996 was 97.28%.

Rental and other income increased  $198,433 from $330,215 to $528,648 during the
three months ended September 30, 1996, as compared to the  corresponding  period
in  1995.  Approximately  $195,000  of  the  increase  is due  to  operation  of
Cambridge,  and the remainder of the increase is  attributable to the previously
mentioned increase in rental rates.

Property  operating and maintenance  expenses increased $32,794 from $106,498 to
$139,292  during the three months ended  September  30, 1996, as compared to the
corresponding  period in 1995. Expenses increased  approximately  $47,000 due to
the acquisition of the Cambridge  property offset by a decrease in operating and
maintenance   expenses  at  the  Hamden  properties  due  to  painting,   office
renovation, and landscaping projects done in 1995

General and  administrative  expenses  increased  $4,862 from $10,024 to $14,886
during  the  three  months  ended   September  30,  1996,  as  compared  to  the
corresponding  period in 1995.  The  increase  is  primarily  due to  additional
expenses  related to the  acquisition  of the  Cambridge  Property and increased
overhead expenses.


                                       12
<PAGE>



Real estate taxes  increased  $16,383  from $36,912 to $53,295  during the three
months ended  September  30, 1996,  as compared to the  corresponding  period in
1995.  Related party management fees increased  $10,670 from $16,619 to $27,289.
These increases were due primarily to the acquisition of the Cambridge property.

Interest  expense  increased  $80,993 from $21,354 to $102,347  during the three
months ended  September  30, 1996,  as compared to the  corresponding  period in
1995.  The  increase is due to the  $4,500,000  mortgage  note  payable  used to
finance the acquisition of the Cambridge property. Depreciation and amortization
increased $40,484 primarily due to the acquisition of the Cambridge property.

The Company's net income  increased  $12,247 from $84,239 to $96,486  during the
three months ended September 30, 1996, as compared to the  corresponding  period
in 1995.  primarily due to the decrease in property  operating  and  maintenance
expenses of the Original Properties.

Liquidity and Capital Resources

Cash and cash  equivalents  totaled  $441,632  as of  September  30,  1996.  The
Company's  long-term  debt to market  capitalization  on September  30, 1996 was
53.56 % based on total market  capitalization  of  $10,597,353  (525,000  shares
outstanding at $9.375 plus long-term debt) and long-term debt of $5,675,478.

Cash  provided by  operating  activities  was $480,467 for the nine months ended
September  30,  1996.  Cash used in  investing  activities  for the  purchase of
property and equipment was $89,239 for the nine months ended September 30, 1996.

Net cash used in  financing  activities  was  $333,321 for the nine months ended
September  30, 1996. On January 12, 1996,  Cambridge  was  purchased  from Grove
Cambridge  Associates  Limited  Partnership for $4,250,000.  The acquisition was
100% financed by a first mortgage of $4,500,000 from a bank.

On September 13, 1996 GREAT  declared a dividend of $0.23 per share,  payable on
October 17, 1996,  to  shareholders  of record on September 25, 1996. On May 17,
1996, GREAT declared a dividend of $0.23 per share,  payable on July 17, 1996 to
shareholders  of record on June 26, 1996.  On March 21, 1996,  GREAT  declared a
dividend  of $0.2275  per share  payable on April 16,  1996 to  shareholders  of
record on March 26, 1996.  The dividends  declared  during the period of $0.6875
per share  resulted  in a 76.60%  payout of funds from  operations  for the nine
months ended September 30, 1996.

GREAT intends to meet its short term  liquidity  requirements  through cash flow
provided by  operations.  GREAT  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.
GREAT may use other  sources  of  capital  to  finance  additional  acquisitions
including,  but not  limited to, the selling of  additional  equity  interest in
GREAT,  non-distributed Funds From Operations,  the issuance of debt securities,
and exchanging Common Shares for properties or interest in properties.




                                       13
<PAGE>



Funds from Operations

Industry  analysts   generally   consider  funds  from  operations   ("FFO")  an
appropriate  measure of performance of an equity REIT.  Funds from operations 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. FFO for years prior
to 1996 have been adjusted to conform to the NAREIT  definition.  GREAT believes
that in order to  facilitate a clear  understanding  of its  operating  results,
funds from operations  should be examined in conjunction  with the net income as
presented in the financial statements and information included elsewhere in this
Report.  Funds from  operations 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.  Funds from
operations  should  not be  considered  as an  alternative  to net  income as an
indication of GREAT's performance or as an alternative to cash flow as a measure
of liquidity.

FFO increased $63,151 from $408,033 for the nine months ended September 30, 1995
to $471,184 for the nine months ended September 30, 1996. Dividends declared for
the nine months ended September 30, 1996 were $360,938,  representing  76.60% of
FFO.  Dividends  declared  for the nine  months  ended  September  30, 1995 were
$355,688, representing 87.17% of FFO.

Inflation

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




                                       14
<PAGE>



PART II.  OTHER INFORMATION

Item 1.           Legal Proceedings.

         None.

Item 2.           Change in Securities.

         None.

Item 3.  Submission of Matters to a Vote of Security Holders.

         None..

Item 4.  Other Information

         None.

Item 5.  Exhibits and Reports on Form 8-K.

         (a)  Exhibits

         See Index to Exhibits on pages E-1 and E-2

         (b)  Reports on Form 8-K.

         None.

SIGNATURES

In accordance  with the  requirements  of the Exchange Act, the  registrant  has
cause this report to be signed on its behalf by the undersigned,  thereunto duly
authorized.

REGISTRANT:
GROVE REAL ESTATE ASSET TRUST
By:     Joseph R. LaBrosse
--------------------------
Name: Joseph R. LaBrosse
Title: Chief Financial Officer, Secretary and Treasurer

Date:  11/12/96
---------------


                                       15
<PAGE>


                                INDEX TO EXHIBITS

Number                                                        Title

3.1  Grove Real Estate Asset Trust Declaration of Trust dated March 21, 1994
     incorporated  by  reference as Exhibit  Number 3.1 to GREAT's  Registration
     Statement  on Form  SB-2  filed  with  the  U.S.  Securities  and  Exchange
     Commission, file no. 33-76732.

3.2  Grove  Real  Estate  Asset  Trust  Bylaws  amended  through  May 17,  1996,
     incorporated  by reference as Exhibit Number 3.2 to GREAT's Form 10-QSB for
     the quarterly period ended June 30, 1996 filed with the U.S. Securities and
     Exchange Commission, File No. 1-13080.


10.2 Amended  Employment  Agreement  dated May 16, 1994 by and between GREAT and
     Damon D.  Navarro  incorporated  by  reference  as Exhibit  Number  10.2 to
     GREAT's  Registration  Statement on Amendment No. 1 to Form SB-2 filed with
     the U.S. Securities and Exchange Commission, file No. 33-76732.


10.3 Amended  Employment  Agreement  dated May 16, 1994 by and between GREAT and
     Brian A.  Navarro  incorporated  by  reference  as Exhibit  Number  10.3 to
     GREAT's  Registration  Statement on Amendment No. 1 to Form SB-2 filed with
     the U.S. Securities and Exchange Commission, file No. 33-76732.


10.4 Amended  Employment  Agreement  dated May 16, 1994 by and between GREAT and
     Edmund F.  Navarro  incorporated  by  reference  as Exhibit  Number 10.4 to
     GREAT's  Registration  Statement on Amendment No. 1 to Form SB-2 filed with
     the U.S. Securities and Exchange Commission, file No. 33-76732.


10.5 Amended  Employment  Agreement  dated May 16, 1994 by and between GREAT and
     Joseph R.  LaBrosse  incorporated  by reference  as Exhibit  Number 10.5 to
     GREAT's  Registration  Statement on Amendment No. 1 to Form SB-2 filed with
     the U.S. Securities and Exchange Commission, file No. 33-76732.


10.6 Amended  Employment  Agreement  dated May 16, 1994 by and between GREAT and
     Gerald A.  McNamara  incorporated  by reference  as Exhibit  Number 10.6 to
     GREAT's  Registration  Statement on Amendment No. 1 to Form SB-2 filed with
     the U.S. Securities and Exchange Commission, file No. 33-76732.
10.7 Amended  Non-Competition  Agreement dated May 16, 1994 by and between GREAT
     and Damon D. Navarro  incorporated  by reference as Exhibit  Number 10.7 to
     GREAT's  Registration  Statement on Amendment No. 1 to Form SB-2 filed with
     the U.S. Securities and Exchange Commission, file No. 33-76732.

10.8 Non-Competition  Agreement  dated May 16, 1994 by and between GREAT and the
     Grove Companies incorporated by reference as Exhibit Number 10.8 to GREAT'S
     Registration  Statement  on  Amendment  No. 1 to Form SB-2  filed with U.S.
     Securities and Exchange Commission, file No. 33-76732.


                                       E-1
<PAGE>



10.16Grove Real  Estate  Asset  Trust 1994 Share  Option  Plan  incorporated  by
     reference as Exhibit Number 10.16 to GREAT's Registration Statement on Form
     SB-2 filed  with the U.S.  Securities  and  Exchange  Commission,  file No.
     33-76732.

10.18Form of Indemnification  Agreement by and between GREAT, the Trust Managers
     and the  Executive  Officers  incorporated  by reference as Exhibit  Number
     10.18 to GREAT's  Registration  Statement  on Form SB-2 filed with the U.S.
     Securities and Exchange Commission, file No. 33-76732

10.19Form of  Administrative  Services  Agreement  by and between  GREAT and the
     Grove  Companies  incorporated  by  references  as Exhibit  Number 10.19 to
     GREAT's Registration  Statement on Form SB-2 filed with the U.S. Securities
     and Exchange Commission, file No. 33-76732.

10.22Assumption  of Mortgage Deed and Security  Agreement  made June 23, 1994 by
     and among Southington Baron Limited Partnership, Charles D. Gersten, Ada C.
     Berin, Grove Real Estate Asset Trust, Damon D. Navarro and Brian A. Navarro
     incorporated  by reference  as Exhibit  Number 10.22 to GREAT's Form 10-KSB
     for the year ended  December  31, 1994 filed with the U.S.  Securities  and
     Exchange Commission, File No. 1-13080.


10.23Mortgage  Note from  Southington  Baron Limited  Partnership  to Charles D.
     Gersten  and Ada C.  Berin  dated  June 8, 1993 in the  original  principal
     amount of $1,250,000  incorporated  by reference as Exhibit Number 10.23 to
     GREAT's  Form  10-KSB for the year ended  December  31, 1994 filed with the
     U.S. Securities and Exchange Commission, File No. 1-13080.


10.24Purchase  and Sale  Agreement  between  Grove Real  Estate  Asset Trust and
     Grove Cambridge  Associates Limited  Partnership  incorporated by reference
     Exhibit  Number 1 to GREAT's  Form 8-K dated  October 30, 1995 and attached
     hereto  as  Exhibit  10.24  filed  with the U.S.  Securities  and  Exchange
     Commission, File No. 1-13080.


10.25Mortgage  Note from Grove Real  Estate  Asset  Trust to First Union Bank of
     Connecticut  dated January 11, 1996 in the  principal  amount of $4,500,000
     incorporated  by reference as Exhibit  10.25 to GREAT's Form 10-KSB for the
     year ended  December 31, 1995 filed with the U.S.  Securities  and Exchange
     Commission, File No. 1-13080.


10.26Form of  Management  Agreement  by and  between  GREAT and  Grove  Property
     Services Limited Partnership  incorporated by reference as Exhibit 10.26 to
     GREAT's  Form  10-KSB for the year ended  December  31, 1995 filed with the
     U.S. Securities and Exchange Commission, File No. 1-13080.


                                       E-2