<PAGE>
 
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-Q

              Quarterly Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934


For the Quarter Ended:  June 30, 1998      Commission File Number:  1-13829
                        -------------                               -------

                             CABOT INDUSTRIAL TRUST
                             ----------------------
             (Exact name of registrant as specified in its charter)

          Maryland                                   04-3397866
       -------------                                 ----------
(State or other jurisdiction of         (I.R.S. Employer Identification Number)
incorporation or organization)



            Two Center Plaza, Suite 200, Boston, Massachusetts 02108
            --------------------------------------------------------
          (Address of principal executive offices, including zip code)


                                (617) 723-0900
                                --------------
             (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                       YES    X       NO  
                             ---           ---                       

Indicate the number of shares outstanding of each of the registrant's classes of
Common Stock, as of the latest practicable date:  As of August 11, 1998,
18,586,764 Common Shares of Beneficial Interest, $.01 par value, of the
Registrant were outstanding.
<PAGE>
 
                         PART I.  FINANCIAL INFORMATION
                                        

ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited consolidated condensed financial statements should be
read in conjunction with the 1997 Form 10-K of the registrant (the "Company").
These consolidated condensed statements have been prepared in accordance with
the instructions of the Securities and Exchange Commission for Form 10-Q and do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements.

In the opinion of the Company's management, all material adjustments (consisting
solely of items of a normal, recurring nature) considered necessary for a fair
presentation of results of operations for the interim period have been included.
The results of consolidated operations for the period from January 1, 1998
through June 30, 1998 are not necessarily indicative of the results that may be
expected for the period from January 1, 1998 through December 31, 1998.

                                       2
<PAGE>
 
 
                            CABOT INDUSTRIAL TRUST

                     CONSOLIDATED CONDENSED BALANCE SHEET
                   AS OF JUNE 30, 1998 AND DECEMBER 31, 1997
                       (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE> 
<CAPTION> 
ASSETS:
                                                        June 30, 1998     December 31, 1997
                                                        -------------     -----------------
                                                        (unaudited)
<S>                                                     <C>                 <C>
INVESTMENT IN REAL ESTATE:                           
Rental Properties                                         $ 917,720           $     --
Less:  Accumulated Depreciation                              (6,933)                --
Properties under Development                                  3,457                 --
                                                          ---------           ---------
                                                          $ 914,244           $     --
                                                          ---------           ---------
OTHER ASSETS:                                        
Cash and Cash Equivalents                                 $   5,386           $       1
Rents and Other Receivables                                   1,102                 --
Deferred Rent Receivable                                      1,090                 --
Deferred Lease Acquisition Costs, Net                        13,721                 --
Deferred Financing Costs, Net                                 1,514                 --
Due from Related Party                                          542                 --
Other Assets                                                  1,147               3,480
                                                          ---------           ---------
TOTAL ASSETS                                              $ 938,746           $   3,481
                                                          =========           =========
                                                     
LIABILITIES AND SHAREHOLDERS' EQUITY:                
                                                     
LIABILITIES:                                                               
Mortgage Debt                                             $  17,533           $     --
Line of Credit Borrowings                                    68,000                 --
Accounts Payable                                                230               2,255
Due to Related Party                                            --                1,225
Accrued Real Estate Taxes                                     5,877                 --
Other Liabilities                                            15,130                 --
                                                          ---------           ---------
                                                          $ 106,770           $   3,480
                                                          ---------           ---------
MINORITY INTEREST                                         $ 476,722           $     --
                                                          ---------           ---------
SHAREHOLDERS' EQUITY:                                
    Common Shares, $0.01 par value,                  
     150,000,000 shares authorized,                  
     18,586,764 shares issued and                    
     outstanding at June 30, 1998                    
     and 50 shares issued and                        
     outstanding at December 31, 1997                     $     186           $     --
Paid in Capital                                             349,264                   1
Retained Earnings                                             5,804                 --
                                                          ---------           ---------
TOTAL SHAREHOLDERS' EQUITY                                $ 355,254           $       1
                                                          ---------           ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                $ 938,746           $   3,481
                                                          =========           =========
</TABLE> 

                                       3
<PAGE>
 
                            CABOT INDUSTRIAL TRUST

                CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
                   FOR THE THREE MONTHS ENDED JUNE 30, 1998
               (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE> 
<CAPTION> 
                                                             Three Months Ended
                                                               June 30, 1998
                                                             -------------------
<S>                                                              <C>
REVENUES:                                                       
Rental Income                                                      $ 22,813
Tenant Reimbursements                                                 3,346
                                                                   --------
                                                                     26,159
                                                                   --------
EXPENSES:
Property Operating                                                    1,474
Property Taxes                                                        3,100
Depreciation and Amortization                                         5,072
General and Administrative                                            1,722
Interest Expense                                                        797
                                                                   --------
  Total Expenses                                                     12,165
                                                                   --------
Interest and Other Income                                               248
                                                                   --------
Income Before Minority Interest Expense                              14,242
Minority Interest Expense                                            (8,161)
                                                                   --------
Net Income                                                         $  6,081
                                                                   ========
Earnings per Share:
    Basic                                                          $   0.33
                                                                   ========
    Diluted                                                        $   0.33
                                                                   ========
Weighted Average Shares:
    Basic                                                            18,587
                                                                   ========
    Diluted                                                          18,587
                                                                   ========
</TABLE> 

                                       4

<PAGE>
 
 
 
                            CABOT INDUSTRIAL TRUST

                CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
                FOR THE SIX MONTHS ENDED JUNE 30, 1998 (NOTE 1)
               (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE> 
<CAPTION> 

                                                 Six Months Ended
                                                  June 30, 1998
                                                 ----------------
<S>                                                <C>
REVENUES:                                       
Rental Income                                        $ 35,655
Tenant Reimbursements                                   5,237
                                                     --------
                                                       40,892
                                                     --------
EXPENSES:                                       
Property Operating                                      2,516
Property Taxes                                          4,742
Depreciation and Amortization                           8,246
General and Administrative                              2,790
Interest Expense                                          952
                                                     --------
   Total Expenses                                      19,246
                                                     --------
Interest and Other Income                                 722
                                                     --------
Income Before Minority Interest Expense                22,368
Minority Interest Expense                             (12,809)
                                                     --------
Net Income                                           $  9,559
                                                     ========
Earnings per Share:                             
    Basic                                            $   0.51
                                                     ========
    Diluted                                          $   0.51
                                                     ========
Weighted Average Shares:                        
    Basic                                              18,587
                                                     ========
    Diluted                                            18,587
                                                     ========
</TABLE> 

                                       5
<PAGE>
 
                            CABOT INDUSTRIAL TRUST

                CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
                FOR THE SIX MONTHS ENDED JUNE 30, 1998 (NOTE 1)
               (UNAUDITED, IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE> 
<CAPTION> 

                                                                Six Months Ended
                                                                  June 30, 1998
                                                                ----------------
<S>                                                               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                         $   9,559
     Adjustments to reconcile net income to cash provided 
       by operating activities:
          Depreciation and Amortization                                8,246
          Straight Line Rent Adjustment                               (1,090)
          Amortization of Deferred Financing Costs                       140
          Minority Interest Expense                                   12,809
          Increase in Rents and Other Receivables                     (1,102)
          Increase in Accounts Payable                                   196
          Increase in Other Assets                                    (1,622)
          Increase in Accrued Real Estate Taxes                        5,877
          Increase in Other Liabilities                                4,841
                                                                   ---------
Net Cash Provided by Operating Activities                             37,854
                                                                   ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and Lease Acquisition Costs                                (253,189)
Improvements to Property                                                (751)
                                                                   ---------
Net Cash Used in Investing Activities                               (253,940)
                                                                   ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in Deferred Financing Costs                                  (1,654)
Debt Principal Repayments                                            (13,427)
Line of Credit Advances, net                                          68,000
Proceeds from the Issuance of Common Shares, net                     178,559
Repurchase of Partnership Units                                       (1,217)
Distributions paid to Common Shareholders                             (3,755)
Distributions paid to Minority Interest                               (5,035)
                                                                   ---------
Net Cash Provided by Financing Activities                            221,471
                                                                   ---------
Net Increase in Cash and Cash Equivalents                              5,385
                                                                   ---------
CASH AND CASH EQUIVALENTS-BEGINNING OF PERIOD                              1
                                                                   ---------
CASH AND CASH EQUIVALENTS- END OF PERIOD                           $   5,386
                                                                   =========
Cash paid for interest, net of amounts capitalized                 $     640
                                                                   =========

</TABLE> 
DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITIES:

    In conjunction with the Offering and Formation Transactions, the Company 
    assumed $18,413 of indebtedness and issued 33,850,000 Common Shares and 
    Partnership Units in exchange for real estate assets and the advisory 
    business of Cabot Partners valued at $659,072 and $77, respectively.

    In conjunction with the acquisition of certain real estate, the Company
    assumed $12,547 of indebtedness and issued Units valued at $2,268.

    At June 30, 1998, accrued capital expenditures (including amounts included
    in accounts payable) totaled $8,374, and accrued offering costs totaled 
    $1,898.
 
                                       6
<PAGE>
 
                            CABOT INDUSTRIAL TRUST

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 1998
        (IN THOUSANDS, EXCEPT SHARE, PER SHARE AND SQUARE FOOTAGE DATA)

1.  General

Organization

Cabot Industrial Trust (the Company), a Maryland real estate investment trust,
was formed on October 10, 1997.  The Company is the managing general partner of
a newly formed limited partnership, Cabot Industrial Properties, L.P. (the
Operating Partnership), and will conduct substantially all of its business
through the Operating Partnership.  As the general partner of the Operating
Partnership, the Company has the exclusive power under the agreement of limited
partnership to manage and conduct the business of the Operating Partnership, and
therefore the Company consolidates the results of the Operating Partnership for
financial reporting purposes.  The Company is a fully integrated, internally
managed real estate company formed to continue and expand the national real
estate business of Cabot Partners Limited Partnership (Cabot Partners).  The
Company expects to qualify as a real estate investment trust (a REIT) for
federal income tax purposes.

Since the Company was formed on October 10, 1997 and did not begin operations 
until February 4, 1998 (see Note 2), the results for the six months ended June 
30, 1998 represent activity for 147 days only.

Use of Estimates

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

Cash Equivalents
The Company considers all short-term investments with an original maturity of
three months or less to be cash equivalents.

Rental Income

All leases are classified as operating leases.  Certain leases provide for
minimum rent payments that increase during the term of the lease and tenant
occupancy during periods for which no rent is due.  The Company records rental
income for the full term of each lease on a straight-line basis.  As of June 30,
1998, the receivables from tenants, net of reserves, which the Company expects
to collect over the remaining life of the leases rather than currently
(Deferred Rent) was $1,090. Deferred Rent is not recognized for income tax
purposes until received.

2. The Formation Transactions, The Offerings and Ownership

Initial Capitalization

The initial capitalization of the Company consisted of 50 shares of common
stock, par value $.01 per share, issued for a total consideration of $1.  In
connection with the Formation Transactions and Offerings (described below), the
Company issued an additional 18,586,714 shares of common stock.

The Formation Transactions

On February 4, 1998, under a Contribution Agreement executed by the Company, the
Operating Partnership, Cabot Partners, and various other contributors, 122 real
estate properties, certain real estate advisory contracts and other assets were
(i) contributed to the Operating Partnership in exchange for Units in the
Operating Partnership that may, subject to certain restrictions, be exchanged
for common shares of the Company or (ii) contributed to the Company in exchange
for common shares.  The properties contributed to the Company were contributed
to the Operating Partnership in exchange for the number of general partnership
Units in the Operating Partnership equal to the number of common shares
exchanged for the property.

The Operating Partnership contributed the real estate advisory contracts to
Cabot Advisors, Inc. (the Management Company) and received 100% of the non-
voting preferred stock of the Management Company, which entitles it to 95% of
the Management Company's net operating cash flow.  All of the common stock of
the Management Company is owned by an officer of the Company.

At June 30, 1998, the Company owned 42.7% of the Operating Partnership.  The
remaining 57.3%, which is owned by investors that elected to receive Operating
Partnership Units, is considered minority interest.

                                       7
<PAGE>
 
                            CABOT INDUSTRIAL TRUST

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 1998
        (IN THOUSANDS, EXCEPT SHARE, PER SHARE AND SQUARE FOOTAGE DATA)

The Offerings

On February 4, 1998, the Company completed the offering of 8,625,000 common
shares of beneficial interest (Common Shares) at an offering price of $20.00 per
share.  In addition, the Company issued 1,000,000 Common Shares to a single
investor in a private offering at $20.00 per share (collectively, the
Offerings).  The Company contributed the net proceeds of the Offerings to the
Operating Partnership in exchange for the number of general partnership
interests in the Operating Partnership equal to the number of Common Shares sold
in the Offerings.

Distributions 

On April 8, 1998 the Company and the Operating Partnership declared
distributions payable on April 30, 1998 to Shareholders or Unitholders of record
as of April 22, 1998, of $.202 per Share/Unit, and on June 11, 1998 the Company
and the Operating Partnership declared distributions payable on July 30, 1998 to
Shareholders or Unitholders of record as of July 10, 1998, of $.325 per
Share/Unit .


3.  Investment in Real Estate

In accordance with generally accepted accounting principles, the Company has
accounted for the Formation Transactions using the purchase method of
accounting.  As such, the assets and liabilities acquired in connection with the
Formation Transactions  are recorded at the fair value of the consideration
surrendered and liabilities assumed, except for the net assets contributed by
Cabot Partners, the sponsor and organizer, which were recorded at carryover
historical cost basis.  The acquisition cost was then allocated to all
identifiable assets based upon their individual estimated fair market values.
The following is a summary of the acquisition cost recorded in connection with
the Formation Transactions:

<TABLE>
<S>                                                            <C>
Fair value of the Company's Common Shares and
  the Operating Partnership's Units, based on the
  February 4, 1998 value of $20 per share/unit, issued
  to the Contributing Investors (except Cabot Partners)          $640,608
Value of Partnership Units issued to Cabot Partners,             
  recorded at carryover historical cost basis                          77
Mortgage debt assumed                                              18,413
Other acquisition costs and liabilities assumed                     8,713
                                                                 --------
Acquisition cost basis                                           $667,811
                                                                 ========
Acquisition cost basis allocated to:                             
Land                                                             $125,850
Buildings                                                         529,498
Lease Acquisition Costs                                            12,412
                                                                 --------
Acquisition cost basis allocated to Real Estate                  
  as a result of the Formation Transactions                      $667,760
Acquisition cost basis allocated to Other Net Assets                   51
                                                                 --------
Total cost basis allocated                                       $667,811
                                                                 ========
</TABLE>

Investments in real estate are depreciated over 40 years using the straight-line
method.  Expenditures for ordinary maintenance and repairs are charged to
operations as incurred.  Significant building renovations and improvements that
improve or extend the useful life of the assets are capitalized.  Tenant
improvements and leasing commissions are capitalized and amortized on the
straight-line method over the terms of the related lease.

                                       8
<PAGE>
 
                            CABOT INDUSTRIAL TRUST

                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              AS OF JUNE 30, 1998
        (IN THOUSANDS, EXCEPT SHARE, PER SHARE AND SQUARE FOOTAGE DATA)

4.   Property Acquisitions
                             
During the period from April 1, through June 30, 1998 the Company has acquired
the following industrial properties:

<TABLE>
<CAPTION>
Property Location               Building Type                       Sq. Feet        Acquisition Cost
-----------------               -------------                       --------        ----------------
<S>                             <C>                               <C>               <C>
Sun Valley, CA                  Bulk Distribution                     181,670           $ 9,770
Otay Mesa, CA                   Workspace                             123,136             7,752
Ontario, CA                     Multi-tenant Distribution             161,180             6,310
Mt. Prospect, IL                Workspace                              43,250             3,617
Cincinnati, OH                  Bulk Distribution                     403,406            12,320
Plano, TX                       Multi-tenant Distribution             206,939             8,393
Huntington Beach, CA            Workspace                             125,000             7,960
Piscataway, NJ                  Workspace                             101,553             4,081
Phoenix, AZ                     Multi-tenant Distribution              89,423             6,744
Simi Valley, CA                 Workspace                             112,271             8,735
                                                                  -----------          --------
                                                                    1,547,828           $75,682
                                                                  ===========          ========
</TABLE>


5.  Earnings per Share

In accordance with Statement of Financial Accounting Standards No. 128,
"Earnings per Share", basic earnings per share have been computed by dividing
net income by the weighted average number of shares outstanding during the
period.  Diluted earnings per share have been computed considering the dilutive
effect of the exercise of Unit options granted by the Operating Partnership.
Basic and diluted earnings per share were calculated as follows:

<TABLE>
<CAPTION>
                                                              Six months       Three months
                                                                ended             ended
                                                            June 30, 1998      June 30 1998
                                                            -------------      ------------
<S>                                                        <C>                 <C>
Basic:
Net Income                                                      $ 9,559            $ 6,081
                                                             ----------         ----------
Weighted Average Shares                                          18,587             18,587
                                                             ----------         ----------
Basic Earnings per Share                                        $   .51            $   .33
                                                             ==========         ==========
Diluted:                                                                        
Net Income                                                      $ 9,559            $ 6,081
Effect of Unit Options                                              (43)               (28)
                                                             ----------         ----------
Income available to Common Shareholders, as adjusted            $ 9,516            $ 6,053
                                                             ----------         ----------
Weighted Average Shares                                          18,587             18,587
                                                             ----------         ----------
Diluted Earnings per share                                      $   .51            $   .33
                                                             ==========         ==========
</TABLE>
                                                                                

                                       9
<PAGE>

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

The statements contained in this discussion and elsewhere in this report that
are not historical facts are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These forward-looking statements are based on current
expectations, estimates and projections about the industry and markets in which
the Company operates, management's beliefs and assumptions made by management.
Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks,"
"estimates" and variations of such words and similar expressions are intended to
identify such forward-looking statements. Such forward-looking statements are
not guarantees of future performance and involve risks and uncertainties.
Therefore, actual outcomes and results may differ materially from what is
expressed or suggested by such forward-looking statements. The Company
undertakes no obligation to update publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. The
Company's operating results depend primarily on income from industrial
properties, which may be affected by various factors, including changes in
national and local economic conditions, competitive market conditions,
uncertainties and costs related to and the imposition of conditions on receipt
of governmental approvals and costs of material and labor, all of which may
cause actual results to differ materially from what is expressed herein. Capital
and credit market conditions which affect the Company's cost of capital also
influence operating results.

Introduction

The Company is an internally managed, fully integrated real estate company,
focused on serving a variety of industrial space users in the country's
principal commercial markets.  The Company owns and operates a diversified
portfolio of bulk distribution, multi-tenant distribution and "workspace" (light
assembly and flex/R & D) properties throughout the United States.  At June 30,
1998 the Company owned 171 properties, 122 of which properties were acquired in
connection with the Formation Transactions described in Note 2 to the
consolidated financial statements herein, and 49 of which properties were
acquired during the period from February 4, 1998 through June 30, 1998 (21 of
the 49 properties were identified in the prospectus for the Company's initial
public offering dated January 30, 1998).  The Company was formed on October 10,
1997, but did not begin operations as a fully integrated real estate company
until the completion of the Formation Transactions and Offerings on February 4,
1998, the date of the Company's initial public offering.  The Company had no
operations prior to February 4, 1998.  Unless otherwise indicated, in the
following discussion dollars are in thousands, except share data.

Results of Operations

Since the Company was formed in October 1997 and did not begin operations until
February 4, 1998, the results for the six months ended June 30, 1998 represent
activity for 147 days, and no comparison of results to prior periods are
available.

Three Months Ended June 30, 1998

Net income attributable to common shareholders for the quarter ended June 30,
1998 totaled $6,081, or $.33 per share.

Rental revenues for the quarter ended June 30, 1998 were $26,159, including
tenant reimbursements of $3,346. Total rental revenue of $20,506 was generated
by the 122 properties owned as of February 4, 1998 as a result of the Formation
Transactions (the Baseline Properties) and $5,653 was generated by the 49
properties acquired subsequent to February 4, 1998.  The ratio of tenant
reimbursements to property operating and real estate tax expenses was
approximately 73%.  Depreciation and amortization related to real estate
investments totaled $5,062 for the quarter ended June 30, 1998.

Interest and other income of $248 consists primarily of interest earned on the
Company's invested cash balances.  Interest expense represents interest incurred
on $17,533 of mortgage indebtedness outstanding at June 30, 1998 and interest on
outstanding borrowings under the Company's Acquisition Facility, net of interest
capitalized to development projects.

Minority interest expense represents net income allocable to holders of
Operating Partnership Units.  At June 30, 1998, the Company owned 42.7% of the
Operating Partnership;  therefore, minority interest ownership was 57.3%.

                                       10
<PAGE>
 
Six Months Ended June 30, 1998

Net income attributable to common shareholders for the six months ended June 30,
1998 totaled $9,559, or $.51 per share.

Rental revenues for the six months ended June 30, 1998 were $40,892, including
tenant reimbursements of $5,237.  Total rental revenue of $33,262 was generated
by Baseline Properties and $7,630 was generated by the 49 properties acquired
subsequent to February 4, 1998.  The ratio of tenant reimbursements to operating
and real estate tax expenses was approximately 72%.  Depreciation and
amortization related to real estate investments totaled $8,236 for the six
months ended June 30, 1998.

Interest and other income included $561 of interest income, primarily consisting
of interest earned on the Company's invested cash balances.  Interest expense
represents $450 of interest incurred on $17,533 of mortgage indebtedness
outstanding and also includes interest expense of $502 related to borrowings
under the Acquisition Facility, net of amounts capitalized to development
projects.


Capital Resources and Liquidity

As a result of the completion of the Offerings in February 1998, the Company
issued 8,625,000 Common Shares to the public and 1,000,000 Common Shares to a
group of investors in a private placement of shares.  All of the Common Shares
were sold at a price of $20.00 per share.  The proceeds from the Offerings, net
of offering costs, were $176,661.

The Company intends to rely on cash provided by operations, unsecured and
secured borrowings from institutional sources, and public debt as its primary
sources of funding for acquisition, development, expansion and renovation
of properties.  The Company may also consider equity financing when such
financing is available on attractive terms.  In March 1998 the Company executed
a $325 million unsecured revolving line of credit, which is the Acquisition
Facility, with Morgan Guaranty Trust Company of New York as lead agent to a
syndicate of banks.  The Acquisition Facility will be used to fund property
acquisitions, development activities, building expansions, tenant leasing costs
and other general corporate purposes.  The Acquisition Facility contains certain
restrictions and requirements, such as total debt-to-assets, debt service
coverage, minimum unencumbered assets to unsecured debt ratios, and other
limitations.  The Company believes cash flow from operations not distributed to
shareholders and unitholders will be sufficient to cover tenant allowances and
costs associated with renewal or replacement of current tenants as their leases
expire and recurring non-incremental revenue generating capital expenditures.

In the normal course of operations, the Company has purchased approximately $36
million of real estate assets subsequent to June 30, 1998, and has commitments
to purchase approximately $65 million of additional real estate assets.  A
number of conditions must be met prior to closing.  It is, therefore uncertain
all these assets will actually be purchased.  The real estate assets acquired
were primarily funded through Acquisition Facility borrowings.

As of June 30, 1998, the Operating Partnership had $17.5 million of fixed rate
debt secured by properties, approximately $68 million of unsecured borrowings
under its Acquisition Facility and an 8.3% debt-to-total market capitalization
ratio. The debt-to-total market capitalization ratio is calculated based on the
Company's total consolidated debt as a percentage of the market value of
outstanding Common Shares and Units (not held by the Company) plus total debt.
The Company has entered into an interest rate collar arrangement relating to its
LIBOR-based Acquisition Facility for a notional amount of $65 million for the
period August 1, 1998 through December 31, 1998. The arrangement is intended to
result in limiting the LIBOR component of the Company's interest rate on an
equivalent amount of borrowings to the range of 5.64% to 5.9% per annum. The
Company has also entered into an interest rate hedge transaction involving the
notional future sale of $100 million of Treasury Securities based on the current
rate for such securities in anticipation of a future debt issuance.

The Company is in the process of assessing its Year 2000 readiness, determining
the extent of Year 2000 issues, and developing a Year 2000 remedial plan to
address identified issues.  The Company expects such plan to be developed by the
end of 1998, and is currently not aware of any significant Year 2000 issues.

Cash and cash equivalents totaled $5,386 at June 30, 1998.  Cash provided by
operating activities for the six months ended June 30, 1998 was $37,854.

                                       11
<PAGE>
 
ITEM 3.  QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

     Not Applicable

                                       12
<PAGE>
 
                           PART II. OTHER INFORMATION
                                        

Item 1.    Legal Proceedings
            Not Applicable

Item 2.    Changes in Securities and Use of Proceeds
            Not Applicable

Item 3.    Defaults Upon Senior Securities
            Not Applicable

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

               On June 11, 1998, at the Annual Meeting of Shareholders, the
               shareholders reelected two incumbent Trustees to three-year terms
               expiring in 2001.  The directors reelected at the meeting were:
               Mr. Noah T. Herndon and Mr. Maurice Segall.  Mr. Herndon received
               15,342,438 shares voted in favor of election and 4,900 shares
               withheld; and Mr. Segall received 15,342,438 shares voted in
               favor of election and 4,900 shares withheld.  No abstentions or
               broker nonvotes were recorded on the election of Trustees.

Item 5.    Other Information
            Not Applicable

Item 6.    Exhibits and Reports on Form 8-K

(a)  Exhibits
            27 Financial Data schedules

(b)  Reports on Form 8-K.

            On June 15, 1998, the Company filed a Form 8-K dated June 11,
            1998 to report, under Item 5 of Form 8-K,  the Company's adoption
            of a Shareholder Rights Plan.


                  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 as of the 12th  day of August, 1998.

                                     CABOT INDUSTRIAL TRUST
                                     ----------------------
                                           Registrant

         8/12/98                      /s/ Neil E. Waisnor
-------------------------------      ----------------------------------
          Date                         Neil E. Waisnor
                                       Senior Vice President-Finance, 
                                       Treasurer, Secretary

         8/12/98                      /s/ Robert E. Patterson
-------------------------------      ----------------------------------
          Date                         Robert E. Patterson
                                       President

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