<PAGE>   1

                                    FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


(Mark One)

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

For quarterly period ended June 30, 2000

( )          TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
             OF THE SECURITIES EXCHANGE ACT OF 1934

             For the transition period from __________ to ___________.


                        COMMISSION FILE NUMBER 000-23733
                                               ---------

                             CAPITAL AUTOMOTIVE REIT
             (Exact name of registrant as specified in its charter)

                 Maryland                                54-1870224
        (State of organization)                       (I.R.S. Employer
                                                   Identification Number)

            1420 Spring Hill Road, Suite 525, McLean, Virginia 22102
              (Address of principal executive offices and zip code)

                                 (703) 288-3075
              (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
    -------       --------

Number of common shares of beneficial interest outstanding as of July 31, 2000
was 20,771,646.



                                       1
<PAGE>   2

                             CAPITAL AUTOMOTIVE REIT
                                    FORM 10-Q
                                      INDEX


<TABLE>
<CAPTION>
                                                                                          Page No.
                                                                                          -------

<S>                                                                                       <C>
Part I - Financial Information

         Item 1 - Financial Statements

           Consolidated Balance Sheets - June 30, 2000 (unaudited) and
               December 31, 1999.                                                             3

           Consolidated Statements of Operations (unaudited) - three months
               and six months ended June 30, 2000 and June 30, 1999.                          4

           Consolidated Statements of Cash Flows (unaudited) - six months
               ended June 30, 2000 and June 30, 1999.                                         5

           Notes to Consolidated Financial Statements (unaudited)                           6 - 11

         Item 2 - Management's Discussion and Analysis of Financial Condition
           and Results of Operations                                                       12 - 18

         Item 3 - Quantitative and Qualitative Disclosures About Market Risk                 18

Part II - Other Information

         Item 1 - Legal Proceedings                                                          19

         Item 2 - Changes in Securities                                                      19

         Item 3 - Defaults Upon Senior Securities                                            19

         Item 4 - Submission of Matters to Vote to Security Holders                        19 - 20

         Item 5 - Other Information                                                          20

         Item 6 - Exhibits and Reports on Form 8-K                                           20

Signatures                                                                                   21
</TABLE>




                                       2
<PAGE>   3



                         PART I - FINANCIAL INFORMATION
                          ITEM I - FINANCIAL STATEMENTS
                             CAPITAL AUTOMOTIVE REIT
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                    JUNE 30,       DECEMBER 31,
                                                                                      2000            1999
                                                                                 -------------    -------------
                                                                                  (UNAUDITED)
<S>                                                                              <C>              <C>
ASSETS
Real estate:
  Land                                                                           $     427,214    $     423,757
  Buildings and improvements                                                           524,531          511,768
  Accumulated depreciation                                                             (29,669)         (21,202)
                                                                                 -------------    -------------
                                                                                       922,076          914,323

Cash and cash equivalents                                                                5,468           11,886

Other assets, net                                                                       15,677           16,350
                                                                                 -------------    -------------
    TOTAL ASSETS                                                                 $     943,221    $     942,559
                                                                                 =============    =============


LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES:
Mortgage loans                                                                   $     508,631    $     501,510
Borrowings under credit facilities                                                       9,500              -
Accounts payable and accrued expenses                                                    7,025           21,298
Security deposits payable                                                                5,012            4,768
                                                                                 -------------    -------------
    TOTAL LIABILITIES                                                                  530,168          527,576
                                                                                 -------------    -------------

Minority Interest                                                                      118,249          115,384

SHAREHOLDERS' EQUITY
Preferred shares, $.01 par value; 20,000,000
    shares authorized; none outstanding                                                    -                -
Common shares, $.01 par value; $100 million authorized shares;
    24,831,305 issued shares at June 30, 2000 and 24,792,115 issued
    shares at December 31, 1999                                                            248              248
Additional paid-in-capital                                                             344,897          344,981
Accumulated deficit                                                                     (7,007)         (12,159)
Less treasury shares at cost, 4,084,700 at June 30, 2000 and
    3,184,700 at December 31, 1999                                                     (43,334)         (33,471)
                                                                                 -------------    -------------
     TOTAL SHAREHOLDERS' EQUITY                                                        294,804          299,599
                                                                                 -------------    -------------

     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                  $     943,221    $     942,559
                                                                                 =============    =============
</TABLE>

See accompanying notes to consolidated financial statements.




                                       3
<PAGE>   4

                            CAPITAL AUTOMOTIVE REIT
                 UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED                       SIX MONTHS ENDED
                                                               JUNE 30,                                JUNE 30,
                                                       2000                1999                2000                1999
                                                    -----------         -----------         -----------         -----------

<S>                                                 <C>                 <C>                 <C>                 <C>
Revenue:
Rental                                              $    25,048         $    15,677         $    49,766         $    30,249
Interest and other                                          217                 221                 674                 437
                                                    -----------         -----------         -----------         -----------
    Total revenue                                        25,265              15,898              50,440              30,686
                                                    -----------         -----------         -----------         -----------

Expenses:
Depreciation and amortization                             4,343               3,834               8,654               7,679
General and administrative                                1,659               1,733               3,324               3,627
Interest                                                 10,385               3,725              20,632               7,000
                                                    -----------         -----------         -----------         -----------
    Total expenses                                       16,387               9,292              32,610              18,306
                                                    -----------         -----------         -----------         -----------

Net income before minority interest                       8,878               6,606              17,830              12,380
Minority interest                                        (2,533)             (1,641)             (5,092)             (3,026)
                                                    -----------         -----------         -----------         -----------

Net income                                          $     6,345         $     4,965         $    12,738         $     9,354
                                                    ===========         ===========         ===========         ===========


Shares of common stock outstanding used to
  compute basic earnings per share                       20,721              21,607              20,896              21,607
                                                    ===========         ===========         ===========         ===========

Basic earnings per share                            $      0.31         $      0.23         $      0.61         $      0.43
                                                    ===========         ===========         ===========         ===========

Shares of common stock outstanding used to
  compute diluted earnings per share                     20,931              21,630              21,040              21,619
                                                    ===========         ===========         ===========         ===========

Diluted earnings per share                          $      0.30         $      0.23         $      0.61         $      0.43
                                                    ===========         ===========         ===========         ===========
</TABLE>


See accompanying notes to consolidated financial statements.



                                       4
<PAGE>   5

                             CAPITAL AUTOMOTIVE REIT
                 UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED JUNE 30,
                                                                                   2000                     1999
                                                                                -----------              -----------
<S>                                                                             <C>                      <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                                      $    12,738              $     9,354
Adjustments to reconcile net income to net cash
  provided by operating activities:
Depreciation and amortization                                                         9,191                    7,903
Income applicable to minority interest                                                5,092                    3,026
Increase in other assets                                                               (398)                  (2,735)
Increase (decrease) in accounts payable and accrued expenses                         (3,245)                     880
Increase in security deposits payable                                                   244                      761

                                                                                -----------              -----------
   Net cash provided by operating activities                                         23,622                   19,189
                                                                                -----------              -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture and equipment, net of disposals                                   (13)                     (30)
Real estate acquisitions, net of sales                                              (15,859)                (126,971)
                                                                                -----------              -----------
   Net cash used in investing activities                                            (15,872)                (127,001)
                                                                                -----------              -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank borrowings                                                        14,200                   62,000
Proceeds from mortgage loans                                                         12,400                      -
Repayment of bank borrowings                                                         (4,700)                     -
Mortgage principal payments                                                          (5,279)                    (132)
Payment of cash dividend                                                            (15,365)                 (14,057)
Payment of partner distribution                                                      (6,033)                  (4,278)
Purchase of treasury shares                                                          (9,863)                     -
Issuance of common shares, net of fees                                                  472                      (93)
                                                                                -----------              -----------
   Net cash (used in) provided by financing activities                              (14,168)                  43,440
                                                                                -----------              -----------

NET DECREASE IN CASH AND CASH EQUIVALENTS                                            (6,418)                 (64,372)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     11,886                   72,106
                                                                                -----------              -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                      $     5,468              $     7,734
                                                                                ===========              ===========


SUPPLEMENTAL DATA:

Real estate acquisitions in exchange for equity issuance                        $       -                $     8,379
                                                                                ===========              ===========

Interest paid during the period                                                 $    25,059              $     5,787
                                                                                ===========              ===========
</TABLE>



See accompanying notes to consolidated financial statements.



                                       5
<PAGE>   6




                             CAPITAL AUTOMOTIVE REIT
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)



1.      ORGANIZATION AND BASIS OF PRESENTATION

Organization

Capital Automotive REIT (the "Company") is a Maryland real estate investment
trust formed in October 1997. The Company owns its property interests through
Capital Automotive L.P. (the "Operating Partnership") and its subsidiaries. The
Company is the sole general partner of the Operating Partnership. As of June 30,
2000, the Company held a 71.4% general partnership interest in the Operating
Partnership. The Company completed its initial public offering of common shares
and began generating rental income in February 1998. References to "we," "us,"
"our," refer to the Company or, if the context otherwise requires, the Operating
Partnership and our business and operations conducted through the Operating
Partnership and/or its directly and indirectly owned subsidiaries.

Our primary business purpose is to own and lease real estate properties (land,
buildings and other improvements) to operators of franchised automobile
dealerships, motor vehicle service, repair or parts businesses and related
businesses. We use (i) the term dealerships to refer to these types of
businesses that are operated on our properties, (ii) the term dealer group to
refer to a group of related persons and companies who sell us properties, and
(iii) the term dealer, tenant or lessee to refer to the related persons and
companies that lease our properties. Our strategy focuses on acquiring real
estate used by multi-site, multi-franchised dealerships located primarily in
major metropolitan areas throughout the United States.


Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared
by our management in accordance with U.S. generally accepted accounting
principles ("GAAP") for interim financial information and in conformity with the
rules and regulations of the Securities and Exchange Commission. Accordingly,
they do not include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for a fair
presentation have been included. The results of operations for the three months
and six months ended June 30, 2000, are not necessarily indicative of the
results that may be expected for the full year. These financial statements
should be read in conjunction with our audited consolidated financial statements
and footnotes thereto, included in the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999.


2.      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The accompanying consolidated financial statements have been prepared in
accordance with GAAP and include our accounts, net of minority interest as
defined in Note 8 herein. All intercompany balances and transactions have been
eliminated in consolidation.




                                       6
<PAGE>   7

Real Estate and Depreciation

Real estate assets are recorded at cost. External acquisition costs directly
related to each property are capitalized as a cost of the respective property.
The cost of real estate properties acquired is allocated between land and
buildings based upon estimated market values at the time of acquisition.
Depreciation is computed using the straight-line method over an estimated useful
life of 20 to 30 years for the buildings and improvements.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of highly liquid instruments purchased
with original maturities of three months or less.

Deferred Loan Costs

Included in other assets are costs incurred in connection with obtaining our
revolving secured credit facilities and issuance of mortgage notes through June
30, 2000, which are amortized over the terms of the respective credit facilities
or notes on a straight-line basis (which approximates the effective interest
method).

Capitalized Leasing Costs

Certain initial direct costs incurred by us in negotiating and consummating a
successful lease are capitalized and generally amortized over the initial term
of the lease. These costs, net of accumulated amortization, are included in
other assets. Capitalized leasing costs include employee compensation and
payroll related fringe benefits directly related to time spent performing
leasing related activities. Such activities include evaluating the prospective
tenant's financial condition, evaluating and recording guarantees, collateral
and other security arrangements, negotiating lease terms, preparing lease
documents and closing the transaction.

Income Taxes

We are qualified as a real estate investment trust under the provisions of the
Internal Revenue Code of 1986, as amended (the "Code"). As a real estate
investment trust, we are generally not subject to federal income tax to the
extent that we distribute annually at least 95% of our taxable income to our
shareholders and comply with certain other requirements.

Rental Revenue Recognition

We lease our real estate pursuant to long-term triple-net leases which typically
require the tenants to pay substantially all expenses associated with the
operations of the real estate, including, but not limited to, taxes, assessments
and other government charges, insurance, utilities, service, repairs,
maintenance and other expenses. All leases are accounted for as operating
leases.

Use of Estimates

The preparation of financial statements in conformity with GAAP 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.





                                       7
<PAGE>   8

3.      ACQUISITIONS AND DISPOSITIONS

During the three months ended June 30, 2000, we closed on approximately $7.5
million in real estate, which included the acquisition of two dealership
properties leased to an existing tenant. Consideration for the real estate
consisted of $4.0 million in mortgage debt obtained during the second quarter of
2000 and the remainder from a combination of funds drawn down on our revolving
credit facility and cash on hand. The properties acquired total approximately
29,000 square feet of buildings and improvements on approximately 3.6 acres of
land and are located in the state of Illinois. The leases for the properties
have initial terms of 15 years and have two renewal options of ten years each.

As of June 30, 2000, we owned 231 dealership properties, in which 353 automotive
franchises reside, with a total investment of approximately $951.7 million.
These properties total approximately 8.1 million square feet of buildings and
improvements on 1,304 acres of land and are located in 27 states. These
properties have initial lease terms generally ranging from ten to 20 years with
a weighted average initial lease term of approximately 13.3 years, and have
renewal options (ranging from a total of ten to 40 years). The renewal options
are exercisable at the option of the tenant.


4.      EARNINGS PER SHARE

Basic earnings per share is computed as net income divided by the weighted
average common shares outstanding for the period. Diluted earnings per share is
computed as net income divided by the weighted average common shares outstanding
for the period plus the effect of dilutive common equivalent shares outstanding
for the period, based on the treasury stock method. Dilutive common equivalent
shares include restricted shares, options and warrants. For the three months and
six months ended June 30, 2000, there were 210,000 and 144,000 common equivalent
shares outstanding, respectively. For the three months and six months ended June
30, 1999, there were 23,000 and 12,000 common equivalent shares outstanding,
respectively.









                                       8
<PAGE>   9


5.      MORTGAGE LOANS

As of June 30, 2000, we had mortgage indebtedness totaling approximately $508.6
million secured by approximately 200 of our dealership properties. The following
is a summary of our mortgage debt as of June 30, 2000 and December 31, 1999:


<TABLE>
<CAPTION>
                                                                                   Balances
                                                             Balances           Outstanding as      Effective
                                       Original Debt      Outstanding as        of December 31,      Interest        Amortization
            Description of Debt            Issued        of June 30, 2000            1999             Rate*            Schedule
-------------------------------------  ---------------   ------------------    ------------------  -------------   ----------------
<S>                                    <C>               <C>                   <C>                     <C>            <C>
7.50% Fixed rate debt due 1/20/03          $ 12,000             $ 11,565              $ 11,730          7.75%          20 year
7.59% Fixed rate debt due 12/1/08            38,050               37,674                38,050          7.99%          17 year
7.635% Fixed rate debt due 10/1/14          111,950              105,750               107,675          7.93%          15 year
8.05% Fixed rate debt due 10/1/14            85,000               83,074                84,528          8.32%          15 year
7.54% Fixed rate debt due 7/6/11            100,000               98,452                99,527          7.71%          25 year
8.03% Fixed rate debt due 9/29/11           150,000              150,000               150,000          8.08%          25 year
(1) Floating rate debt due 12/22/09          10,000                9,800                10,000          8.19%            (1)
(2) Floating rate debt due 03/02/10           8,400                8,316                    --          8.04%            (2)
(3) Floating rate debt due 06/15/10           4,000                4,000                    --          8.64%            (3)
                                       ---------------   ------------------    ------------------
    Total ...........................     $ 519,400            $ 508,631             $ 501,510
                                       ===============   ==================    ==================
</TABLE>


      * Includes deferred loan fees amortized over the life of the loans.

(1) The loan bears interest at a variable rate equal to 200 basis points per
    annum above the A1-P1 Commercial Paper Rate. The weighted average interest
    rate for the quarter ended June 30, 2000 was 8.02%. The terms of the loan
    require quarterly principal payments of $100,000 and quarterly interest
    payments.

(2) The loan bears interest at a variable rate equal to 200 basis points per
    annum above the A1-P1 Commercial Paper Rate. The weighted average interest
    rate for the quarter ended June 30, 2000 was 7.92%. The terms of the loan
    require quarterly principal payments of $84,000 and quarterly interest
    payments.

(3) The loan bears interest at a variable rate equal to 215 basis points per
    annum above the A1-P1 Commercial Paper Rate. The weighted average interest
    rate for the quarter ended June 30, 2000 was 8.64%. The terms of the loan
    require quarterly principal payments of $40,000 and quarterly interest
    payments. The loan is secured by mortgages on the two properties acquired
    during the three months ended June 30, 2000, which as of June 30, 2000, have
    an aggregate net book value of approximately $5.7 million. There is one
    financial covenant limiting our total debt to 65% of our assets, as defined
    in the loan agreement. There are negative covenants relating to customary
    items such as operation and maintenance of properties securing the loan and
    limitations on issuing additional indebtedness at the subsidiary level.

As of June 30, 2000, we were in compliance with all of the loan covenants
related to our mortgage indebtedness.


6.    CREDIT FACILITIES

As of June 30, 2000, we had a $50 million revolving partially secured credit
facility from a financial institution, under which $9.5 million was outstanding.
The facility has a three-year term and terminates on March 3, 2002. The facility
bears interest equal to the 30-day LIBOR rate plus 175 basis points. The
weighted average interest rate for the quarter ended June 30, 2000 was 8.16%.
The effective interest rate



                                       9
<PAGE>   10

(which includes debt issuance costs) for the quarter ended June 30, 2000 was
8.57%. As of June 30, 2000, we were in compliance with the loan covenants.

As of June 30, 2000, we had a $100 million secured revolving credit facility
from a financial institution under which no amounts were outstanding. The
facility has a one-year term, which terminates on March 21, 2001 and is
renewable annually. Borrowings require monthly interest payments at a floating
rate equal to 225 basis points above the 30-day LIBOR rate and repayment of
principal within 150 days. As of June 30, 2000, we were in compliance with the
loan covenants.


7.      NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement was originally effective for
all fiscal quarters of fiscal years beginning after June 15, 1999; however,
during the second quarter of 1999 the FASB deferred the effective date until
June 15, 2000. SFAS No. 133 does not require restatement of financial statements
from prior periods. SFAS No. 133 requires an entity to recognize all derivatives
as either assets or liabilities in the statement of financial position and
measure those instruments at fair value. We believe that the adoption of SFAS
No. 133 will not have a significant impact on our consolidated financial
position, results of operations or cash flows.


8.      MINORITY INTEREST

Minority interest is calculated at approximately 28.6% of the Operating
Partnership's partners' capital as of June 30, 2000 and 28.5% of the Operating
Partnership's partners' net income for the three months ended June 30, 2000 and
28.6% for the six months ended June 30, 2000. The ownership of the Operating
Partnership as of June 30, 2000 is as follows (units of limited partnership
interest in the Operating Partnership ("Units"), in thousands):

<TABLE>
<CAPTION>
                                                     Units       Percent
                                                  -----------   ----------

<S>                                                <C>           <C>
Partners' capital:
      Limited Partners                               8,321.6       28.6%
      The Company                                   20,746.6       71.4%
                                                    ---------     ------

        Total                                       29,068.2     100.0%
                                                   =========     ======
</TABLE>


9.      401(K) PLAN

During 1998, we adopted the Capital Automotive L.P. Employee 401 (k) Plan (the
"401(k) Plan"). Employees who are at least 21 years of age are eligible to
participate in the 401(k) Plan after three months of service. Participants may
contribute up to 20% of their earnings, on a pre-tax basis, subject to annual
limitations imposed by the Code. We may make matching or discretionary
contributions to the 401(k) Plan at the discretion of management. During
December 1999, we approved a 20% match of the participant's elected deferral
contribution during 2000 (subject to maximum limits). Our matching contribution
vests ratably over five years from each employee's date of service.




                                       10
<PAGE>   11

10.   DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN

During April 2000, we implemented a Dividend Reinvestment and Share Purchase
Plan (the "Plan"). Under the Plan, current shareholders and holders of Units
("unitholders") are permitted to elect to reinvest all, a portion or none of
their cash dividends into more shares of common stock through the Dividend
Reinvestment Program of the Plan. The Plan also provides both new investors and
existing shareholders and unitholders with a method to purchase shares of common
stock under the Share Purchase Program of the Plan. The Plan permits current
shareholders, unitholders and new investors to invest a minimum of $500 up to a
maximum of $10,000 in common shares per month. With respect to reinvested
dividends and direct purchases of common shares up to $10,000, shares of common
stock will be purchased at a discount ranging from 0% to 5% (currently 3%) from
market price, as more fully described in the Prospectus relating to the Plan.
The Plan also allows us to raise additional capital by waiving the limitations
on the $10,000 maximum per month, as more fully described in the Prospectus
relating to the Plan.

Common shares may be purchased directly from the Company or in open market or
privately negotiated transactions, as determined from time to time by the
Company, to fulfill the requirements for the Plan. At present, the Company
anticipates that all common shares purchased will be purchased directly from the
Company. For the three months ended June 30, 2000, we issued 21,287 common
shares under the Share Purchase Program of the Plan and received $291,000 in
proceeds.


11.   SUBSEQUENT EVENTS

Declaration of Dividend

On July 24, 2000, we declared a dividend of $0.3725 per share, which will be
paid on August 18, 2000 to shareholders of record as of August 10, 2000.




                                       11
<PAGE>   12


                             CAPITAL AUTOMOTIVE REIT
           ITEM II - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
        CONDITION AND RESULTS OF OPERATIONS - THREE MONTHS AND SIX MONTHS
                     ENDED JUNE 30, 2000 AND JUNE 30, 1999


The following discussion should be read in conjunction with the accompanying
unaudited consolidated financial statements and notes thereto.

Certain statements in this Form 10-Q are "forward-looking statements" within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Also, documents that we subsequently file with the Securities
and Exchange Commission and that are incorporated by reference herein will
contain forward-looking statements. When we refer to forward-looking statements
or information, sometimes we use words such as "may," "will," "could," "should,"
"plans," "intends," "expects," "believes," "estimates," "anticipates" and
"continues." In particular, Item II and Item III of Part I of this Form 10-Q
describe forward-looking information. The statements made therein are not all
inclusive, particularly with respect to possible future events, and should be
read together with other filings made by the Company under the Securities Act
and the Exchange Act, including the risks and other risk factors contained in
the Company's Form 8-K/A filed on January 19, 2000. Other parts of this Form
10-Q may also describe forward-looking information. Many things can happen that
can cause our actual results to be very different than those described. These
factors include:

        -       risks that our tenants will not pay rent or that our operating
                costs will be higher than expected;

        -       risks of interest rate fluctuations impacting future
                acquisitions;

        -       risks that additional acquisitions may not be consummated; and

        -       environmental and other risks associated with the acquisition
                and leasing of automotive properties.

Given these uncertainties, readers are cautioned not to place undue reliance on
these forward-looking statements. We also make no promise to update any of the
forward-looking statements, or to publicly release the results if we revise any
of them.


OVERVIEW

Our primary business purpose is to own and lease real estate properties (land,
buildings and other improvements) to operators of franchised automobile
dealerships, motor vehicle service, repair or parts businesses and related
businesses. As of June 30, 2000, we owned 231 dealership properties, in which
353 automotive franchises reside, with a total investment of approximately
$951.7 million. These properties total approximately 8.1 million square feet of
buildings and improvements on 1,304 acres of land and are located in 27 states.

Substantially all of our properties are leased pursuant to long-term triple-net
leases, under which the tenants typically pay substantially all operating
expenses of a property, including, but not limited to, taxes, assessments and
other government charges, insurance, utilities, service, repairs, maintenance
and other expenses. The initial lease terms generally range from ten to 20
years, with a weighted average initial lease term of approximately 13.3 years,
and have options to renew upon the same terms and conditions for one or more
additional periods of five to ten years (ranging from a total of ten to 40
years). The renewal options are exercisable at the option of the tenant. Our
portfolio weighted average initial cap rate at June 30, 2000 was approximately
10.5%, which is calculated as the percentage of the initial annual base rent
over the purchase price paid to the sellers for the related properties.



                                       12
<PAGE>   13

Substantially all of our revenues are derived from (1) rents received or accrued
under long-term, triple-net leases; and (2) interest earned from the temporary
investment of funds in short-term investments.

We incur general and administrative expenses including, principally,
compensation expense for our executive officers and other employees,
professional fees and various expenses incurred in the process of identifying
and acquiring additional properties. We are self-administered and managed by our
trustees, executive officers and staff. Our primary non-cash expense is the
depreciation of our properties. We depreciate buildings and improvements on our
properties over a 40-year period for tax purposes and a 20-year to 30-year
period for financial reporting purposes. We do not own or lease any significant
personal property, furniture or equipment at any property we currently own.


SECOND QUARTER ACQUISITIONS

During the three months ended June 30, 2000, we closed on approximately $7.5
million in real estate, which included the acquisition of two dealership
properties leased to an existing tenant. Consideration for the real estate
consisted of $4.0 million in mortgage debt obtained during the second quarter of
2000 and the remainder from a combination of funds drawn down on our revolving
credit facility and cash on hand. The properties acquired total approximately
29,000 square feet of buildings and improvements on approximately 3.6 acres of
land and are located in the state of Illinois. The leases for the properties
have initial terms of 15 years and have two renewal options of ten years each.


RESULTS OF OPERATIONS

Rental revenue for the three months ended June 30, 2000, increased 60% to $25.0
million, as compared to $15.7 million for the same quarter in 1999. Rental
revenue for the six months ended June 30, 2000, increased 65% to $49.8 million,
as compared to $30.2 million for the same period in 1999. The increase was
primarily attributable to the growth of our real estate portfolio and the timing
of our property acquisitions (231 properties as of June 30, 2000 versus 154
properties as of June 30, 1999), from which we generate our rental income. In
addition, included in rental revenue for the three months and six months ended
June 30, 2000 were straight-lined rents totaling $519,000 and $1.0 million,
respectively. During the third quarter of 1999, we began, on a prospective
basis, straight-lining our rents for leases with fixed minimum escalators. The
effect on prior years was not material.

Interest and other income for the three months ended June 30, 2000, decreased 2%
to $217,000 from $221,000 for the same quarter in 1999. Interest and other
income for the six months ended June 30, 2000, increased 54% to $674,000 from
$437,000 for the same period of 1999. The increase for the six months ended June
30, 2000 was primarily attributable to a $294,000 gain on the sale of properties
during the first quarter of 2000, partially offset by a decrease in interest
earned on temporary investments.

Depreciation and amortization for the three months ended June 30, 2000 increased
13% to $4.3 million from $3.8 million for the same quarter in 1999. Depreciation
and amortization for the six months ended June 30, 2000 increased 13% to $8.7
million from $7.7 million for the same period in 1999. Depreciation and
amortization consisted primarily of depreciation on buildings and improvements
owned during those periods. The increase is attributable to the growth of our
real estate portfolio, resulting in an increase in our depreciable assets.
Partially offsetting the increase was a change in the depreciable life on the
majority of our buildings and improvements that were acquired prior to 1999 and
that were being depreciated over 20 years. During the third quarter of 1999, we
reviewed the age and estimated remaining useful life of each of our properties
in our real estate portfolio that we acquired prior to 1999. Based on the
average age of these assets, we changed the depreciable life on the majority of
our buildings



                                       13
<PAGE>   14

and improvements that were currently being depreciated over a 20-year life to a
30-year life in order to properly reflect the estimated remaining useful lives.
The change in depreciable life is considered a change in an accounting estimate
and has been recorded on a prospective basis beginning in the third quarter of
1999. The impact of this change decreased depreciation expense on the assets
acquired prior to 1999 by approximately $1.1 million for the three months ended
June 30, 2000 and $2.2 million for the six months ended June 30, 2000 as
compared to the same period in 1999.

General and administrative expenses for the three months ended June 30, 2000
decreased 4% to $1.66 million, as compared to $1.73 million for the same quarter
in 1999. General and administrative expenses for the six months ended June 30,
2000 decreased 8% to $3.3 million, as compared to $3.6 million for the same
period in 1999. The decrease is primarily due to decreased payroll and related
benefits attributable to staffing reductions throughout 1999 and the reduction
in advertising expenses.

Interest expense for the three months ended June 30, 2000 increased to $10.4
million from $3.7 million for the same quarter in 1999. Interest expense for the
six months ended June 30, 2000 increased to $20.6 million from $7.0 million for
the same period in 1999. The increase was due to an increase in debt outstanding
during that time period (including mortgage debt and borrowings under our credit
facilities) which was obtained to finance the acquisition of properties and the
repurchase of our common shares. Debt outstanding as of June 30, 2000 was
approximately $518.1 million (consisting of approximately $508.6 million of
mortgage debt and approximately $9.5 million of borrowings under our credit
facilities) compared to $223.9 million (consisting of approximately $161.9
million of mortgage debt and approximately $62.0 million of borrowings under our
credit facility) as of June 30, 1999.


LIQUIDITY AND CAPITAL RESOURCES


Cash and cash equivalents were $5.5 million and $7.7 million at June 30, 2000
and June 30, 1999, respectively. The changes in cash and cash equivalents during
the six months ended June 30, 2000 and 1999 were attributable to operating,
investing and financing activities, as described below.

Cash provided by operating activities for the six months ended June 30, 2000 and
1999 was $23.6 million and $19.2 million, respectively, and represents, in both
years, cash received from rents under long-term triple-net leases, plus interest
and other income, less normal recurring general and administrative expenses and
interest payments on debt outstanding. Cash used in investing activities for the
six months ended June 30, 2000 and 1999 was $15.9 million and $127.0 million,
respectively, and primarily reflects the acquisition of dealership properties,
net of sales during those periods. Cash used in financing activities for the six
months ended June 30, 2000 was $14.2 million and primarily reflects the
repurchase of common shares totaling $9.9 million, the payment of mortgage
principal payments totaling $5.3 million, the repayment of bank borrowings
totaling $4.7 million and the distributions made to shareholders and limited
partners during the period totaling $21.4 million. This was partially offset by
the proceeds from mortgage loans that closed during the period totaling $12.4
million and $14.2 million of proceeds from bank borrowings. Cash provided by
financing activities for the six months ended June 30, 1999 was $43.4 million
and primarily reflects the $62.0 million of proceeds from bank borrowings during
that period partially offset by distributions made to shareholders and limited
partners during the period totaling $18.3 million.


Mortgage Indebtedness

As of June 30, 2000, we had mortgage indebtedness totaling approximately $508.6
million secured by approximately 200 of our dealership properties. The following
is a summary of our mortgage debt as of June 30, 2000 and December 31, 1999:



                                       14
<PAGE>   15

<TABLE>
<CAPTION>
                                                                                   Balances
                                                             Balances           Outstanding as      Effective
                                       Original Debt      Outstanding as        of December 31,      Interest        Amortization
            Description of Debt            Issued        of June 30, 2000            1999             Rate*            Schedule
-------------------------------------  ---------------   ------------------    ------------------  -------------   ----------------
<S>                                    <C>               <C>                   <C>                     <C>            <C>
7.50% Fixed rate debt due 1/20/03          $ 12,000             $ 11,565              $ 11,730          7.75%          20 year
7.59% Fixed rate debt due 12/1/08            38,050               37,674                38,050          7.99%          17 year
7.635% Fixed rate debt due 10/1/14          111,950              105,750               107,675          7.93%          15 year
8.05% Fixed rate debt due 10/1/14            85,000               83,074                84,528          8.32%          15 year
7.54% Fixed rate debt due 7/6/11            100,000               98,452                99,527          7.71%          25 year
8.03% Fixed rate debt due 9/29/11           150,000              150,000               150,000          8.08%          25 year
(1) Floating rate debt due 12/22/09          10,000                9,800                10,000          8.19%            (1)
(2) Floating rate debt due 03/02/10           8,400                8,316                    --          8.04%            (2)
(3) Floating rate debt due 06/15/10           4,000                4,000                    --          8.64%            (3)
                                       ---------------   ------------------    ------------------
    Total ...........................     $ 519,400            $ 508,631             $ 501,510
                                       ===============   ==================    ==================
</TABLE>



    * Includes deferred loan fees amortized over the life of the loans.


(1) The loan bears interest at a variable rate equal to 200 basis points per
    annum above the A1-P1 Commercial Paper Rate. The weighted average interest
    rate for the quarter ended June 30, 2000 was 8.02%. The terms of the loan
    require quarterly principal payments of $100,000 and quarterly interest
    payments.

(2) The loan bears interest at a variable rate equal to 200 basis points per
    annum above the A1-P1 Commercial Paper Rate. The weighted average interest
    rate for the quarter ended June 30, 2000 was 7.92%. The terms of the loan
    require quarterly principal payments of $84,000 and quarterly interest
    payments.

(3) The loan bears interest at a variable rate equal to 215 basis points per
    annum above the A1-P1 Commercial Paper Rate. The weighted average interest
    rate for the quarter ended June 30, 2000 was 8.64%. The terms of the loan
    require quarterly principal payments of $40,000 and quarterly interest
    payments. The loan is secured by mortgages on the two properties acquired
    during the three months ended June 30, 2000, which as of June 30, 2000, have
    an aggregate net book value of approximately $5.7 million. There is one
    financial covenant limiting our total debt to 65% of our assets, as defined
    in the loan agreement. There are negative covenants relating to customary
    items such as operation and maintenance of properties securing the loan and
    limitations on issuing additional indebtedness at the subsidiary level.

As of June 30, 2000, we were in compliance with all of the loan covenants
related to our mortgage indebtedness.


Credit Facilities

As of June 30, 2000, we had a $50 million revolving partially secured credit
facility from a financial institution, under which $9.5 million was outstanding.
The facility has a three-year term and terminates on March 3, 2002. The facility
bears interest equal to the 30-day LIBOR rate plus 175 basis points. The
weighted average interest rate for the quarter ended June 30, 2000 was 8.16%.
The effective interest rate (which includes debt issuance costs) for the quarter
ended June 30, 2000 was 8.57%. As of June 30, 2000, we were in compliance with
the loan covenants.



                                       15
<PAGE>   16

As of June 30, 2000, we had a $100 million secured revolving credit facility
from a financial institution under which no amounts were outstanding. The
facility has a one-year term, which terminates on March 21, 2001 and is
renewable annually. Borrowings require monthly interest payments at a floating
rate equal to 225 basis points above the 30-day LIBOR rate and repayment of
principal within 150 days. As of June 30, 2000, we were in compliance with the
loan covenants.


Liquidity Requirements

Short-term liquidity requirements consist primarily of normal recurring
operating expenses, regular debt service requirements (including debt service
relating to additional and replacement debt), recurring corporate expenditures,
distributions to shareholders and unitholders, and amounts required for
additional property acquisitions. We expect to meet these requirements (other
than amounts required for additional property acquisitions) through cash flow
provided by operating activities. We anticipate that any additional acquisition
of properties during the next 12 months will be funded with amounts available
under our existing credit facilities, with future long-term secured and
unsecured debt and the issuance of common or preferred equity or Units.
Acquisitions will be made subject to our investment objectives and policies with
the intention of maximizing both current income and long-term growth in income.

During the second quarter, we issued a commitment to Sonic Automotive, Inc. and
affiliates ("Sonic") to purchase on an as needed basis a minimum of $75 million
in dealership properties by the end of 2000. These dealership properties may be
recently constructed dealerships or may be associated with Sonic's future
acquisitions of dealership operations. The dealership properties that may be
purchased under this commitment will be leased back to Sonic utilizing a
"floating cap rate lease program". Under this program, rental payments are
adjusted monthly based upon a spread over the 30 day LIBOR. The cap rate may be
fixed at the option of the tenant for the remainder of the lease term.

As of June 30, 2000, long-term liquidity requirements consisted primarily of
maturities under our long-term debt. We anticipate that long-term liquidity
requirements will also include amounts required for acquisition of properties.
We expect to meet long-term liquidity requirements through long-term secured and
unsecured borrowings and other debt and equity financing alternatives. The
availability and terms of any such financing will depend upon market and other
conditions.

Our liquidity requirements with respect to future acquisitions may be reduced to
the extent that we use Units as consideration for such purchases.

We have adopted a policy to limit debt to approximately 65% of our assets (total
assets plus accumulated depreciation). As of June 30, 2000, our debt was
approximately 53% of our assets. This policy may be changed by our Board of
Trustees at any time without shareholder approval. In addition, to minimize
interest rate risk, we currently intend to maintain at least 85% of our total
outstanding debt as long-term fixed rate debt or floating rate debt that is
substantially match-funded with our leases.

In light of our current debt to asset ratio, we believe that we are able to
obtain additional financing for our short-term and long-term capital needs
without exceeding our debt to asset ratio policy. However, there can be no
assurance that additional financing or capital will be available, or that the
terms will be acceptable or advantageous to us.



                                       16
<PAGE>   17

YEAR 2000 UPDATE

In 1999, we discussed the nature and progress of our plans to confront year 2000
issues. In late 1999, we completed our remediation and testing of our software
applications and hardware systems. As a result of those planning and
implementation efforts, we experienced no material information technology or
non-information technology systems problems, and we believe those systems
successfully responded to the year 2000 date change. We did not incur
significant costs in designing and implementing our year 2000 plan, nor did we
incur significant costs in modifying our existing software applications,
replacing hardware or hiring consultants in resolving year 2000 issues. In
addition, we are not aware that any of our tenants or third parties with whom we
conduct business experienced any material systems problems related to year 2000
issues. We will continue to monitor our information technology and
non-information technology systems and those of our tenants and third parties
with whom we conduct business throughout the year 2000 to ensure that any latent
Year 2000 matters that may arise are addressed promptly. Although management
does not anticipate any additional expenditures relating to year 2000 issues,
there can be no assurance as to the magnitude of any future costs until
significant time has past.


FUNDS FROM OPERATIONS

Funds From Operations ("FFO") is defined under the revised definition adopted in
October 1999 by the National Association of Real Estate Investment Trusts
(NAREIT) as net income (loss) before minority interest (computed in accordance
with generally accepted accounting principles) excluding gains (or losses) from
sales of property plus depreciation and amortization of assets unique to the
real estate industry, and after adjustments for unconsolidated partnerships and
joint ventures. To conform to NAREIT's revised FFO definition adopted in 1999,
we began in the first quarter of 2000 including straight-lined rents in the
calculation of FFO. Prior to the first quarter of 2000, we excluded
straight-lined rents from the FFO calculation. For comparison purposes, we have
included straight-lined rents in the FFO calculation for all periods presented.
We began straight-lining rents on a prospective basis in the third quarter of
1999, therefore the revised definition has no impact on FFO for the three months
and six months ended June 30, 1999. The effect of straight-lined rents on prior
years was not material.

NAREIT developed FFO as a relative measure of performance and liquidity of an
equity REIT in order to recognize that income-producing real estate historically
has not depreciated on the basis determined under GAAP. FFO does not represent
cash flows from operating activities in accordance with generally accepted
accounting principles (which, unlike FFO, generally reflects all cash effects of
transactions and other events in the determination of net income) and should not
be considered an alternative to net income as an indication of our performance
or to cash flow as a measure of liquidity or ability to make distributions. We
consider FFO a meaningful, additional measure of operating performance because
it primarily excludes the assumption that the value of the real estate assets
diminishes predictably over time, and because industry analysts have accepted it
as a performance measure. Comparison of our presentation of FFO, using the
NAREIT definition, to similarly titled measures for other REITs may not
necessarily be meaningful due to possible differences in the application of the
NAREIT definition used by such REITs.




                                       17
<PAGE>   18

FFO for the three months and six months ended June 30, 2000 and 1999 is computed
as follows (in thousands):


<TABLE>
<CAPTION>
                                                          Three Months Ended                        Six Months Ended
                                                                June 30,                                June 30,
                                                     ------------------------------          ------------------------------

                                                        2000                1999                2000                1999
                                                      --------            --------            --------            --------

<S>                                                  <C>                 <C>                 <C>                 <C>
Net Income before Minority Interest                   $  8,878            $  6,606            $ 17,830            $ 12,380

Real Estate Depreciation and
  Amortization                                           4,318               3,808               8,605               7,628

Gain on Sale of Assets                                     (17)               (164)               (311)               (164)

Funds From Operations                                 $ 13,179            $ 10,250            $ 26,124            $ 19,844
                                                      ========            ========            ========            ========

Weighted Average Number of Common
  Shares and Units Used to Compute
  Basic FFO per Share                                   29,043              28,466              29,217              28,371
                                                      ========            ========            ========            ========

Weighted Average Number of Common
  Shares and Units Used to Compute
  Fully Diluted FFO per Share                           29,253              28,488              29,361              28,382
                                                      ========            ========            ========            ========
</TABLE>


ITEM III.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to certain financial market risks, the most predominant being
fluctuations in interest rates. Interest rate fluctuations are monitored by our
management as an integral part of our overall risk management program, which
recognizes the unpredictability of financial markets and seeks to reduce the
potentially adverse effect on our results of operations.

Since December 31, 1999, there have been no material changes in the information
regarding market risk that was provided in the Company's Form 10-K for the year
ended December 31, 1999.

During the six months ended June 30, 2000, our fixed-rate debt decreased from
$491.5 million at December 31, 1999 to $486.5 million as of June 30, 2000.
Interest rate fluctuations will affect the fair value of our fixed rate debt
instruments. If interest rates on our fixed rate debt instruments at June 30,
2000 had been one percent higher, the fair value of those debt instruments on
that date would have decreased by approximately $30.0 million. During the six
months ended June 30, 2000, our variable-rate debt increased from $10.0 million
as of December 31, 1999 to $31.6 million as of June 30, 2000. Interest rate
fluctuations will effect our annual interest expense on our variable rate debt.
If interest rates on our variable rate debt instruments outstanding at June 30,
2000, had been one percent higher, our annual interest expense relating to that
debt instrument would have increased by $316,000 based on balances at June 30,
2000.




                                       18
<PAGE>   19


                             CAPITAL AUTOMOTIVE REIT
                            PART II-OTHER INFORMATION



Item 1.  Legal Proceedings

Not applicable.

Item 2.  Changes in Securities

Not applicable.

Item 3.  Defaults Upon Senior Securities

Not applicable.

Item 4.  Submission of Matters to Vote of Security Holders

The annual meeting of shareholders of Capital Automotive REIT (the "Meeting")
was held on May 4, 2000. The matters voted upon at the meeting were: (1)
Election of Trustees and (2) Ratification of the appointment of Arthur Andersen
LLP as Independent Public Accountants for 2000. Proxies for the meeting were
solicited pursuant to Section 14(a) of the Securities and Exchange Act of 1934,
as amended, and the regulations promulgated thereunder. There was no
solicitation in opposition to management's solicitations. All of management's
nominees for trust managers were elected. The following table sets forth the
results of these votes:

<TABLE>
<CAPTION>
                       Proposal                                         Results
--------------------------------------------------------   -----------------------------------

(1) A proposal to elect eleven Board of Trustee members:

<S>                                                        <C>                    <C>
Thomas D. Eckert                                           For:                    18,496,440
                                                           Withheld:                  187,876

Craig L. Fuller                                            For:                    18,491,440
                                                           Withheld:                  192,876

David Gladstone                                            For:                    18,491,440
                                                           Withheld:                  192,876

William E. Hoglund                                         For:                    18,491,440
                                                           Withheld:                  192,876

R. Michael McCullough                                      For:                    18,491,440
                                                           Withheld:                  192,876

Lee P. Munder                                              For:                    18,496,440
                                                           Withheld:                  187,876

John J. Pohanka                                            For:                    18,496,440
                                                           Withheld:                  187,876

John E. Reilly                                             For:                    18,491,440

</TABLE>



                                       19
<PAGE>   20

<TABLE>
<S>                                                        <C>                    <C>
                                                           Withheld:                  192,876

Robert M. Rosenthal                                        For:                    18,496,440
                                                           Withheld:                  187,876

Vincent A. Sheehy                                          For:                    18,496,440
                                                           Withheld:                  187,876

William R. Swanson                                         For:                    18,491,440
                                                           Withheld:                  192,876

<CAPTION>
(2) Ratification of the Appointment of Arthur Andersen LLP as Independent Public
Accountants:

<S>                                                        <C>                    <C>
                                                           For:                    17,839,377
                                                           Against:                    96,659
                                                           Abstain:                   748,280
                                                           Broker No Vote:                  0
</TABLE>


Item 5.  Other Information

Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

(a)     Exhibits:


        27      Financial Data Schedule


(b)     Reports on Form 8-K

Not applicable





                                       20
<PAGE>   21






                                   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.


                             CAPITAL AUTOMOTIVE REIT
                             (Registrant)



                             BY:   /s/  Thomas D. Eckert
                                  ---------------------------------------------
                                   Thomas D. Eckert
                                   President and Chief Executive Officer
                                   (principal executive officer)



                             BY:   /s/  David S. Kay
                                 ----------------------------------------------
                                   David S. Kay
                                   Vice President and Chief Financial Officer
                                   (principal financial and accounting officer)


Dated:  August 10, 2000
       -----------------






                                       21