<PAGE>

                 THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING
               SUBMITTED PURSUANT TO RULE 901(d) OF REGULATION S-T

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                                    ---------

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

                   For the Fiscal Year ended November 30, 1996
                           Commission File No. 1-6833

                                 MGI PROPERTIES
--------------------------------------------------------------------------------
             (Exact name of Registrant as specified in its charter)

         Massachusetts                                 04-6268740
------------------------------------        ------------------------------------
(State or other jurisdiction of               (IRS Employer Identification No.)
incorporation or organization)

                One Winthrop Square, Boston, Massachusetts 02110
--------------------------------------------------------------------------------
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:   (617) 422-6000
                                                       -------------

Securities registered pursuant to Section 12(b) of the Act:

                                                        Name of each exchange
Title of each class                                      on which registered
-------------------                                     ----------------------
Common Shares                                           New York Stock Exchange
(par value $l per share)

        Securities registered pursuant to Section 12(g) of the Act: None

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

                Yes  X                                No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

As of December 31, 1996, the aggregate market value of the voting shares of the
Registrant held by non-affiliates of the Registrant was $251,469,372.

Common Shares Outstanding as of November 30, 1996:   11,563,199

         The information required by Part III of Form 10-K will be incorporated
by reference to a definitive proxy statement involving the election of Trustees
which is expected to be filed by the Registrant pursuant to Regulation 14A
within 120 days after the close of its fiscal year ended November 30, 1996.


<PAGE>



                                                  TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                               Page
                                                                                                               ----
<S>      <C>        <C>                                                                                         <C>
PART I   1
         Item 1.    Business......................................................................................1
         Item 2.    Properties...................................................................................10
         Item 3.    Legal Proceedings............................................................................12
         Item 4.    Submission of Matters to a Vote Security Holders.............................................12

PART II  13
         Item 5.    Market for Registrant's Common Equity
                    and Related Stockholder Matters..............................................................13
         Item 6.    Selected Financial Data......................................................................14
         Item 7.    Management's Discussion and Analysis of
                    Financial Condition and Results of Operations................................................15
         Item 8.    Financial Statements and Supplementary Data..................................................22
         Item 9.    Changes in and Disagreements with Accountants
                    on Accounting and Financial Disclosure.......................................................22

PART III 23

PART IV  24
         Item 14    Exhibits, Financial Statement Schedules
                    and Reports on Form 8-K......................................................................24

POWER OF ATTORNEY   28

SIGNATURES.......................................................................................................28
</TABLE>


<PAGE>


                                     PART I

Item 1.       Business
------        --------

General
-------

              MGI Properties (the "Trust" or "MGI") is an unincorporated
business trust organized under the laws of the Commonwealth of Massachusetts.
MGI commenced operations in 1971 as a real estate investment trust (a "REIT").
Since that time, the Trust has elected to be treated as a REIT under Sections
856-860 of the Internal Revenue Code of 1986, as amended (the "Internal Revenue
Code"), and expects to continue to operate in a manner which will entitle the
Trust to be so treated. For each taxable year in which the Trust qualifies as a
REIT under the Internal Revenue Code, taxable income distributed to the holders
of its Common Shares will not be taxable to the Trust (other than certain items
of tax preference which are subject to minimum tax in the hands of the Trust).
See "Investment and Operating Policies" and "Portfolio" below and the
description of dividend policy included under Item 5 of this Annual Report on
Form 10-K for the year ended November 30, 1996 (the "Report").

              References herein to the Trust include its wholly-owned
subsidiaries.

Narrative Description of Business
---------------------------------

              MGI is a self-administered equity REIT that owns and operates a
diversified portfolio of income producing real estate consisting at November 30,
1996 of 55 commercial properties and interests in five multi-family residential
properties. Since 1992, the Trust has focused on the commercial segment of the
real estate market, specifically industrial, office/research and development and
office properties located in New England. At November 30, 1996, 48.2% of MGI's
real estate assets (based on cost) were located in New England. As of such date,
the Trust's commercial properties were leased to 307 tenants and aggregated
5,091,000 square feet (2,000,000 industrial, 1,195,000 office, 1,089,000
office/research and development and 807,000 retail). The multi-family properties
consist of five wholly-owned residential communities aggregating 1,335 units. At
November 30, 1996, the commercial and residential properties were 96.3% and
96.8% leased, respectively.

              The Trust, formerly known as Mortgage Growth Investors(R), was
organized in 1971 as a Massachusetts common law business trust. MGI initially
operated as a hybrid REIT with a significant portion of its assets invested in
mortgage loans. In 1985, the Trust began the conversion to an equity REIT, which
has direct ownership of income producing properties. The conversion was
completed by January 1993.

              The Trust employs fourteen persons.

Investment and Operating Policies
---------------------------------

              The Trust's primary business objective is to increase funds from
operations ("FFO"), while building additional value of its real estate
investments through income growth and capital appreciation. The investment
policy of the Trust in its broadest aspect is to seek income of the types
permitted to a REIT under Section 856 of the Internal Revenue Code, consistent
with its Declaration of Trust. Under its Declaration of Trust, the Trust is
permitted to invest in a broad range of real estate investments, including,
among other things, equity interests, full or participating interests in
securities, whether or not secured by mortgages, interests in rents and 




                                      -1-
<PAGE>

any other interests related to real property. The Trust's policies are subject 
to ongoing review by the Board of Trustees and may be modified from time to time
to take into consideration changes in business or economic conditions or 
otherwise as circumstances warrant.

              The Trust seeks to achieve its primary business objective by (1)
active management of its real estate (2) a focus on maintaining the quality of
its properties and the demand for its properties at a level that will support
high occupancy rates, leasing attractiveness to quality tenants and increasing
rental rates and (3) the acquisition of high quality properties. The Trust's
investment focus with respect to type of property has, during the last several
years, been directed primarily on the commercial segment of the New England real
estate market, particularly industrial, office/research and development and
office properties. MGI currently intends to continue this policy, but also
intends to retain modest geographic diversity, as well as diversification by
property type. Although MGI expects the percentage of its real estate portfolio
represented by New England properties to increase, MGI, to a lesser extent, will
consider property acquisitions in other markets in which favorable opportunities
are similarly perceived and where MGI has a substantial presence or where the
purchase of properties, on an individual or portfolio basis, or over time would
establish such a presence. In the past, MGI has periodically changed its
emphasis from one sector to another in accordance with its perception of market
opportunities.

              MGI's philosophy has been to seek what management believes to be
value-creating opportunities by acquiring quality properties that have not met
their full potential frequently at a cost believed to be below replacement
value. Management believes that its investments can be actively managed to
create a total return which includes current income and capital appreciation.
The Trust has recently operated with an individual investment parameter of below
$20,000,000 (but has exceeded and may occasionally exceed this parameter) and in
most cases acquires properties at prices below $10,000,000. The successful
execution of this strategy has permitted MGI to profitably dispose of assets
from time to time. The decision to sell specific properties or investments
involves a number of factors, including the economic climate (giving effect also
to the impact of tax laws and other regulatory factors), future potential and
reinvestment alternatives. As indicated above, the investment focus may change,
based upon the ongoing review of the Trust's policies by the Board of Trustees.

              MGI's acquisition criteria generally include several of the
following factors: (i) a purchase price believed to represent a discount to
estimated replacement costs; (ii) well located, high quality general purpose
properties; (iii) locations in market areas that allow MGI to build upon its
market presence and knowledge; (iv) sellers, frequently institutions, with an
objective to liquidate, not operate, real estate; (v) properties believed
capable of strong total return performance; (vi) existing leases at below market
rents which may enable MGI to increase rental rates as lease terms expire; (vii)
vacancies or leases with near term expirations which will enable MGI to enhance
revenue through the leasing of available space; and (viii) an all cash purchase
where it results in a more favorable purchase price.

              MGI's commercial portfolio, as well as the focus of its recent
acquisition activity, is generally comprised of general purpose, functional
buildings rather than properties characterized by demand limited to a specific
type and size of tenant. Many of the Trust's properties are easily divisible so
as to accommodate users of various amounts of space. MGI frequently focuses on
owning and acquiring properties located in recognized business parks or at nodes
with easy access to highways and commercial areas and sufficient residential
support. When it is practicable, MGI seeks to increase its presence within parks
or submarket locations where its owns property because of the potential
operating and tenant retention benefits.


                                      -2-
<PAGE>

              MGI's leasing, maintenance and tenant and capital improvement
activities are designed to attract and retain quality tenants and maintain high
occupancy rates. MGI officers typically work with local property managers to
actively manage its real estate portfolio. Generally, MGI is directly involved
in establishing the strategic direction for each property, identifying new
tenants, negotiating leases, budgeting and monitoring operating performance and
implementing and directing significant renovations and rehabilitations. The
local property managers provide on-site management and leasing services,
typically with a staff that works solely on MGI's assets. At this time, MGI
believes that using local property management companies provides cost effective
management and results in improved access to significant market information and
improved tenant satisfaction as a result of the personnel dedicated solely to
MGI's properties. In the future the Trust may internalize the property
management function with respect to its New England properties if it determines
that such management will improve service, reduce operating costs or provide a
strategic competitive advantage.

              MGI seeks to maintain a well-balanced, conservative and flexible
capital structure by: (i) maintaining a conservative dividend pay-out ratio that
enables MGI to both reinvest in capital and tenant improvements for existing
properties and increase cash available for investment; (ii) borrowing primarily
at fixed rates; (iii) extending and sequencing the maturity dates of its debt;
and (iv) maintaining conservative debt service coverage ratios. Management
believes that these strategies have enabled and should continue to enable the
Trust to access debt and equity capital markets for its long-term investment
requirements, although there can be no assurance thereof.

              As is common with any real estate owner or lender investing in
equity real estate, partnerships, mortgage loans and other investments, the
Trust from time to time may restructure its financial arrangements with
partners, tenants or borrowers who encounter financial or other difficulties.
Accordingly, the Trust, as circumstances warrant, has modified and will modify a
lease, partnership, loan or other agreement if, after investigation, it is
established that such modification would be economically feasible and in the
best interests of the Trust.

              The Trust's business is limited to investments in real estate,
direct or indirect, including investments in and possible future acquisitions of
real estate companies, including those with development or property management
capability. To the extent that the Trust has assets not otherwise invested in
real estate, the Trust may invest such assets in other securities, including
United States government obligations and commercial paper, so long as, in the
opinion of the Trustees, such securities may be held without jeopardizing the
Trust's qualification as a REIT under the Internal Revenue Code.

              Funds necessary to conduct operations are provided from rental and
interest income, mortgaging of equity investments, lines of credit, corporate
borrowings, sale of marketable securities and loan repayments and amortization.
Such operations include the Trust's continuous incurrence of costs, reimbursed
and unreimbursed, for improvements and renovations of its existing properties in
order to maintain and enhance their value. From time to time, as and to the
extent conditions warrant, the Trust operates on a leveraged basis by incurring
indebtedness in order to increase its capital available for investment when, in
the Trustees' judgment, the Trust will benefit thereby (see "Risk Factors --
Leverage"). There is no assurance at any given time that borrowed funds will be
available or that the terms and conditions of such borrowings will be
satisfactory. The Trust may employ short-term or long-term borrowings to fund
some of its investments. Reference is made to Note 4 of the Notes to
Consolidated Financial Statements included in Item 14 below.



                                      -3-
<PAGE>

Portfolio
---------

         The Trust's portfolio at November 30, 1996 consisted of investments in
fifty-five commercial properties and interests in five multi-family residential
properties. Included in commercial properties and classified as "Other" are
three land investments and a 4% partnership investment.

         The Trust's real estate investments can be classified by type of
properties and geographic location. As of November 30, 1996, the Trust's real
estate investments were diversified by property type as follows:

<TABLE>
<CAPTION>
                                                                                            % of
                                                                                          Portfolio 
                                                                           % of         Based on 1996
                                                                         Portfolio         Property
                                Number of           Square Feet/           Based           Operating               %
                                Properties             Units              on Cost           Income               Leased
                                ----------             -----              -------           ------               ------
<S>                                 <C>               <C>                  <C>                <C>                  <C>  
Industrial                          19                2,000,000            18.4%              22.8%                97.9%
Office/R&D                          12                1,089,000            14.4%              17.9%               100.0%
Office                              14                1,195,000            31.3%              26.7%                95.7%
Retail                               6                  807,000            18.1%              15.4%                88.3%
Other                                4                       --             0.8%               0.6%               100.0%
                                     -                ---------            -----              -----                -----
Total Commercial                    55                5,091,000            83.0%              83.4%                96.3%
                                                      =========                                                    =====

Multi-Family                         5                    1,335            17.0%              16.6%                96.8%
                                     -                    =====            -----              -----                =====

Total Portfolio                     60                                    100.0%             100.0%                96.4%
                                    ==                                    ======             ======                ====

</TABLE>


                                      -4-
<PAGE>


         As of November 30, 1996, the Trust's real estate investments were
diversified by geographic region as follows:

<TABLE>
<CAPTION>
                                                                                                     % of
                                                                                                  Portfolio
                                                                                   % of         Based on 1996
                                            Square Feet of                      Portfolio          Property
                             Number of        Commercial        Apartment         Based            Operating            %
Location                    Properties         Property           Units          on Cost             Income           Leased
--------                    ----------         --------           -----          -------             ------           ------
<S>                             <C>            <C>                   <C>           <C>                <C>              <C>  
New England                     32             3,104,000              --           48.2%              50.9%            98.1%
Mid-West                        13               996,000             722           25.5%              24.3%            92.9%
Southeast                       10               637,000             376           14.9%              11.7%            95.9%
Mid-Atlantic                     5               354,000             237           11.4%              13.1%            97.3%
                                 -              --------             ---           -----              -----            -----

Total Portfolio                 60             5,091,000           1,335          100.0%             100.0%              96.4%
                                ==             =========           =====          ======             ======              =====
</TABLE>


         Lease terms relating to the Trust's properties range from
tenancies-at-will up to twenty-five years. The Trust leases commercial space to
307 commercial tenants, including 173 office tenants, 66 retail tenants, 47
industrial tenants and 21 office/research and development tenants.

         Additional information concerning the Trust's mortgage and real estate
investments is set forth under Item 2 and in Notes 1, 2, 3, 4 and 8 in the Notes
to Consolidated Financial Statements and Schedule III of the Financial Statement
Schedule included in Item 14 below.

Competition, Regulation and Other Factors
-----------------------------------------

         The success of the Trust depends, among other factors, upon general
economic conditions and trends, including interest rates, availability of
credit, real estate trends, construction costs, income tax laws, governmental
regulations and legislation, increases or decreases in operating expenses,
zoning laws, population trends and the ability of the Trust to attract tenants
and keep its properties leased at profitable levels. The Trust does not consider
its real estate business to be seasonal in nature.

         In the areas of investment permitted to the Trust, there may be a wide
variety of competing investors and lenders. The Trust competes with life
insurance companies, real estate investment trusts, pension funds, other
financial institutions, partnerships, corporations, individuals and other
business entities, both domestic and foreign. An increase in the number of
competing investors and lenders and the availability of investment funds can
have the effect of increasing competition for investments in real estate and
reducing the yields realizable with respect to such investments. With respect to
properties presently owned by the Trust, or in which it has an investment, the
Trust competes with other owners of properties for tenants. The Trust's
properties compete for tenants primarily on the basis of location, rent and the
condition and design of improvements. Its properties compete with similar
properties located in their geographic area, and such properties may be newer
and larger than those in which the Trust has an interest. There are no
statistics readily available which would enable the Trust to determine its
position with respect to its competitors in the real estate investment industry.


                                      -5-
<PAGE>

         The Trust has been able to compete effectively despite recessionary
conditions in certain regions from time to time and believes that it will be
able to do so in the future, by reason of the diverse make-up of its income
producing properties, as well as their modest geographic diversity (as of
November 30, 1996, 48.2% of the Trust's properties are in New England) and the
diversity of its tenant base. However, recessionary economic conditions in
certain regions or any adverse changes in local or national economic conditions
could result in the inability of some existing tenants of the Trust to meet
their lease or other obligations and could otherwise adversely affect the
Trust's ability to attract or retain tenants. Management believes, however, that
by reason of the factors stated above and the Trust's financial strength and
operating practices, particularly its ability to implement renovations and
improvements, it will be able to maintain occupancies and, over time, increase
rental income from its properties (although there can be no assurance thereof).

RISK FACTORS
------------

Leverage

         The Trust's obligations for borrowed money totaled $138.5 million at
November 30, 1996. Although the Trust currently intends to limit the extent of
its borrowing to not more than 45% of its total assets, the formation documents
of the Trust do not contain any limitation on the amount or percentage of
indebtedness the Trust might incur, however, the Trustees reserve the right to
increase such leverage. The Trust has been actively exploring property
acquisitions in the past and expects to continue to do so in the future. In
connection with these activities or in connection with the refinancing of
existing indebtedness, the Trust may incur additional borrowings in the future.
Increases in the Trust's leverage could increase the risk of default under its
outstanding indebtedness. The Trust's failure to pay its debt obligations when
due could result in the Trust's loss of the properties collateralizing such
indebtedness or otherwise adversely affect the Trust.

         The Trust's debt obligations subject to floating interest rates at
November 30, 1996 aggregate approximately $33.8 million at a weighted average
interest rate of approximately 7.3% and represented 24.4% of the Trust's
outstanding debt. Significant increases in interest rates on floating rate debt
would adversely affect the net income, funds from operations and cash available
for distribution to shareholders. These risks may inhibit the Trust's ability to
raise capital, particularly through the issuance of equity securities.

Geographic Concentration

         The Trust's operating income and the value of its properties may be
affected by a number of factors, including the local economic climate (which may
be adversely impacted by business layoffs or downsizing, industry slowdowns,
changing demographics and other factors) and local real estate conditions (such
as oversupply of or reduced demand for commercial or other properties). At
November 30, 1996, approximately 50% of MGI's real estate assets, based on cost,
were located in New England, primarily in the suburban Boston area. The
concentration of the Trust's assets in the New England area may increase in the
near term. The Trust's performance and its ability to make distributions to
shareholders is largely dependent on the economic conditions in the markets
where the Trust's properties are located. There can be no assurance as to the
continued growth of the economy in these markets or other markets upon which the
Trust's tenants depend. Negative economic changes in these markets may,
therefore, adversely affect the Trust.



                                      -6-
<PAGE>


Miscellaneous Real Estate Investment Considerations

         Real property investments are subject to varying degrees of risk. The
returns available from equity investments in real estate depend in large part on
the amount of income generated and expenses incurred. If the Trust's properties
do not generate revenues sufficient to meet operating expenses, including debt
service, tenant improvements, leasing commissions and other capital
expenditures, the Trust may have to borrow additional amounts to cover costs,
and the Trust's cash flow and ability to make distributions to its shareholders
will be adversely affected.

         The Trust's operating income and the value of its properties may be
adversely affected by a number of factors, including the national economic
climate; the local economic climate; local real estate conditions; the
perceptions of prospective tenants of the attractiveness of the property; the
ability of the Trust to provide adequate management, maintenance and insurance;
and increased operating costs (including real estate taxes and utilities). In
addition, real estate values and income from properties are also affected by
such factors as applicable laws, including tax laws, interest rate levels and
the availability of financing.

         Numerous office and industrial properties compete with the Trust's
properties in attracting tenants to lease space. Some of these competing
properties are newer or in more desirable locations that some of the Trust's
properties. Significant development of office or industrial properties in a
particular area could have a material effect on the Trust's ability to lease
space in its properties and on the rents charged.

         The Trust will be subject to the risks that upon expiration of leases
for space located in its properties, the leases may not be renewed, the space
may not be re-let or the terms of renewal or re-letting (including the cost of
required renovations) may be less favorable than current lease terms. If the
Trust were unable to promptly re-let or renew the leases for all or a
substantial portion of this space or if the rental rates upon such renewal or
re-letting were significantly lower than expected rates, then the Trust's cash
flow and ability to make distributions to shareholders may be adversely
affected.

         Although the Trust believes the properties are generally multi-purpose
and could be re-let to other tenants, some properties could require
reconfiguration or remodeling before the property could be re-let to other
tenants. Any such required activity could delay immediate occupancy by the
re-letting tenant.

         Equity real estate investments are relatively illiquid. Such
illiquidity will tend to limit the ability of the Trust to vary its portfolio
promptly in response to changes in economic or other conditions. In addition,
the Internal Revenue Code of 1986 limits the Trust's ability to sell properties
held for fewer than four years, which may affect the Trust's ability to sell
properties without adversely affecting returns to holders of Common Shares.

         Because increases in certain taxes and expenses are not always passed
through to tenants under leases, such increases may adversely affect the Trust's
cash flow and its ability to make distributions to shareholders. The Trust's
properties are also subject to various federal, state and local regulatory
requirements, such as the Americans with Disabilities Act and state and local
fire and life safety requirements. Failure to comply with these requirements
could result in the imposition of fines by governmental authorities or awards of
damages to private litigants. The Trust believes that the properties are
currently in compliance with all such regulatory requirements. However, there
can be no assurance that these requirements will not be changed or that new
requirements will not be imposed which would require significant unanticipated
expenditures by the Trust and could have an adverse effect on the Trust's cash
flow and distributions.


                                      -7-
<PAGE>


Financial Condition and Bankruptcy of Tenants

         The Trust's net income, funds from operations and cash available for
distribution would be adversely affected if a significant tenant or a
significant number of tenants becomes unable to meet their obligations. In the
event of a default by a tenant, the Trust could experience delays and incur
substantial costs in enforcing its rights as lessor. Upon such a default, the
Trust's cash flow could also be reduced if the Trust was unable to re-lease,
upon satisfactory terms, any significant portion of its properties.

         At any time, a tenant of the Trust's properties may seek the protection
of the bankruptcy laws, which could result in the rejection and termination of
such tenant's lease and thereby cause a reduction in the Trust's net income,
funds from operations and cash available for distribution. No assurance can be
given that tenants will not file for bankruptcy protection in the future or, if
any tenants file, that they will affirm their leases and continue to make rental
payments in a timely manner. Furthermore, protection of the Trust's investments
may require foreclosure or other action leading to acquisition of title to
properties underlying its mortgage loans or similar investments. Currently, at
lease one significant tenant (Bradlees, Inc.) is operating under Chapter 11 of
the Federal Bankruptcy Code. Although its lease with the Trust has been
affirmed, there can be no assurance that future operating performance will not
be adversely affected by developments with respect to Bradlees, Inc.

Possible Environmental Liabilities

         Under various Federal, state and local laws, ordinances and
regulations, such as the Comprehensive Environmental Response Compensation and
Liability Act or "CERCLA," and common laws, an owner or operator of real estate
is liable for the costs of removal or remediation of certain hazardous or toxic
substances on or in such property as well as certain other costs, including
governmental fines and injuries to persons and property. Such laws often impose
such liability without regard to whether the owner or operator knew of, or was
responsible for, the presence of such hazardous or toxic substances. The
presence of such substances, or the failure to remediate such substances
properly, may adversely affect the owner's or operator's ability to sell or rent
such property or to borrow using such property as collateral. Persons who
arrange for the disposal or treatment of hazardous or toxic substances may also
be liable for the costs of removal or remediation of such substances at a
disposal or treatment facility, whether or not such facility is owned or
operated by such person. Certain environmental laws impose liability for release
of asbestos-containing materials into the air, and third parties may seek
recovery from owners or operators of real property for personal injuries
associated with asbestos-containing materials.

         Substantially all of the Trust's properties have been subjected to
Phase I or similar environmental audits by independent environmental
consultants. These environmental audit reports have not revealed any potential
significant environmental liability, nor is the Trust aware of any environmental
liability with respect to its properties that it believes would have a material
adverse effect on the Trust's business, properties or results of operations.
This evaluation however, could prove to be incorrect depending on certain
factors. For example, the Trust's assessments may not reveal all environmental
liabilities or there may be material environmental liabilities of which the
Trust is unaware. In addition, assumptions regarding groundwater flow and the
existence of contamination are based on available sampling data, and there are
no assurances that the data is reliable in all cases. Moreover, there can be no
assurance that (i) future laws, ordinances or regulations will not impose any
material environmental liability or (ii) the current environmental condition of
the Trust's properties will not be affected by tenants, by the condition of land
or operations in the vicinity of the Trust's properties (such as the presence of
underground storage tanks), or by third parties unrelated to the Trust.


                                      -8-
<PAGE>


         Some tenants use or generate hazardous substances in the ordinance
course of their respective businesses. These tenants are required under their
leases to comply with all applicable laws and have agreed to indemnify the Trust
for any claims resulting from noncompliance, and the Trust is not aware of any
environmental problems results from the tenants' use or generation of hazardous
substances. There are no assurances that all tenants will comply with the terms
of their leases or remain solvent and that the Trust may not at some point be
responsible for contamination caused by such tenants.

Insurance
---------

         Although there can be no assurance thereof, MGI carries comprehensive
general liability coverage and umbrella liability coverage on all of its
properties with limits of liability deemed adequate to insure against liability
claims and provide for cost of defense. The Trust is also insured against the
risk of physical loss in amounts estimated to be adequate to reimburse it on a
replacement cost basis for costs incurred to repair or rebuild each property,
including loss of rental income during the reconstruction period. However, there
can be no assurance that this coverage will be adequate or that it will insure
all of the risks to which the Trust's properties are subject. By reason of the
high cost of earthquake and flood insurance and the fluctuations in price and
availability, management has determined that the risk of loss due to earthquake
and flood does not currently justify the cost of such coverage, however,
management may periodically reconsider its position

Adverse Consequence of Failure to Qualify as a REIT and Other Tax Risks
-----------------------------------------------------------------------

         The Trust believes that it has operated in a manner that permits it to
qualify as a REIT under the Internal Revenue Code for each taxable year since
its formation. No assurance can be given that the Trust will be able to continue
to operate in a manner so as to qualify or remain so qualified. Qualification as
a REIT involves the application of highly technical Code provisions for which
there are only limited judicial or administrative interpretations and the
determination of various factual matters and circumstances not entirely within
the Trust's control. For example, in order to qualify as a REIT, at least 95% of
the Trust's gross income in any year must be derived from qualifying sources and
the Trust must make distributions to shareholders equal to 95% of its REIT
taxable income (excluding net capital gains). Further, no assurance can be given
that new legislation, regulations or administrative decisions will not change
the tax law with respect to REIT qualification or the Federal income tax
consequences of such qualification. If the Trust fails to qualify as a REIT, it
will be subject to Federal income tax (including any applicable alternative
minimum tax) on its taxable income at corporate rates. Unless entitled to relief
under certain statutory provisions, the Trust could also be disqualified from
treatment as a REIT for the four taxable years following the year during which
qualification is lost. This treatment would reduce the net earnings available
for investment or distribution to shareholders because of the additional tax
liability for the year or years involved. In addition, distributions would no
longer be required to be made. To the extent that distributions to shareholders
have already been made in anticipation of its assumed qualification as a REIT,
the Trust could be required to borrow funds or to liquidate certain of its
investments to pay the applicable tax. The failure to qualify as a REIT may also
constitute a default under certain Trust indebtedness.



                                      -9-
<PAGE>

Item 2.       Properties.
------        -----------

             The following table sets forth certain information concerning the
Trust's properties at November 30, 1996.

<TABLE>
<CAPTION>
====================================================================================================================================
                                                                        Scheduled 
                                   Net Carrying Value    Percentage  Lease Expirations  Number of                          Lease
INDUSTRIAL               Sq. Ft.    Dollars     Sq. Ft.   Leased      1997       1998   Tenants   Principal Tenant      Expiration
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>      <C>          <C>         <C>         <C>       <C>     <C>      <C>                      <C>
Distribution and Manufacturing
Wilmington, MA            294,000  $6,792,000   $23.10      100%        20%       14%       4      Avon Dispatch            5/31/00
St. Louis, MO             200,600   3,955,000    19.72      100%       100%       --        1      Home Decorators          8/31/97
N. Charleston, SC         191,900   2,239,000    11.67      100%        --       100%       1      Mill Transportation     12/31/97
Northborough, MA          102,300   2,274,000    22.23      100%        24%       22%       3      Filene's Basement        9/15/01
St. Louis, MO              95,600   2,099,000    21.96      100%        --        75%       2      S. P. Richards           8/31/98
Franklin, MA               65,300   3,171,000    48.56      100%        --        --        1      Harris Wholesale         2/28/01
St. Louis, MO              61,300   1,450,000    23.65      100%        53%       47%       2      I.C.S.                   4/15/97
St. Louis, MO              61,200   1,473,000    24.07      100%        --       100%       1      Tyler Mountain Water    12/31/97
St. Louis, MO              41,000   1,129,000    27.54      100%        --        --        2      ZEPP Manufacturing       5/31/00

Flex
Tewksbury, MA             189,200  10,334,000    54.62      100%        --        --        1      Avid Technology          6/30/10
Wilmington, MA            109,400   4,407,000    40.28      100%        --        8%        3      United Shoe Machinery   12/31/01
Wilmington, MA            100,200   2,461,000    24.56      100%        --        --        2      Datawatch                4/30/99
Franklin, MA              100,000   5,066,000    50.66      100%        --        --        1      Thermo Instruments        2/1/06
                                                                                                   Systems
Bedford, MA                93,200   2,365,000    25.38      100%        --        --        3      Imaging Tech             7/31/01
Franklin, MA               83,500   3,780,000    45.27      100%        --        --        2      Chromatic                6/30/97
Marlborough, MA            75,000   2,791,000    37.21       63%        --        25%       3      NMC Homecare            12/31/00
Marlborough, MA            59,400   2,304,000    38.79      100%        --        59%       4      Diebold Incorporated    11/30/02
St. Louis, MO              40,900   1,219,000    29.80      100%         3%       97%       8      Southtown Machining      4/30/98
St. Louis, MO              35,600   1,889,000    53.06       61%        20%       23%       3      Vanstar Corporation      5/31/97
------------------------------------------------------------------------------------------------------------------------------------
Total                   1,999,600  $61,198,000  $30.61       98%        16%       26%     47
====================================================================================================================================
OFFICE/RESEARCH AND DEVELOPMENT
------------------------------------------------------------------------------------------------------------------------------------
Tewksbury, MA             140,000  $8,806,000   $62.90      100%        --        --        1      Avid Technology          6/30/10
Andover, MA               128,400   6,149,000    47.89      100%        --        --        1      Hewlett Packard          7/31/99
Billerica, MA             122,300   4,591,000    37.54      100%        --        --        1      Precision Robots         7/31/01
Chelmsford, MA            108,500   4,522,000    41.68      100%        --        --        1      Telebit, Inc.           12/31/99
Andover, MA               105,500   6,803,000    64.48      100%        --        --        1      ISI Systems, Inc.        4/30/99
Billerica, MA             100,000   4,092,000    40.92      100%        --       100%       1      Bay Networks             6/30/98
Chelmsford, MA             70,900   1,934,000    27.28      100%         9%       86%       6      W.J. Schaffer Assoc.      7/31/98
Bedford, MA                70,600   2,125,000    30.10      100%        --       100%       1      Atex Publishing          7/31/98
Littleton, MA              66,500   2,315,000    34.81      100%        --        78%       4      X-Rite                  12/31/97
Andover, MA                60,600   3,960,000    65.35      100%        --        --        1      Cabletron                5/31/01
Billerica, MA              60,000   1,983,000    33.05      100%        --        --        2      Bay Networks             3/30/00
Billerica, MA              56,300   1,948,000    34.60      100%        --        --        1      Bay Networks            12/31/99
------------------------------------------------------------------------------------------------------------------------------------
Total                   1,089,600  $49,228,000  $45.18      100%         1%      26%      21
====================================================================================================================================


                                      -10-
<PAGE>


Item 2.       Properties.  (continued)
------        ----------
====================================================================================================================================
                                                                        Scheduled 
                                  Net Carrying  Value    Percentage  Lease Expirations  Number of                          Lease
OFFICE                   Sq. Ft.    Dollars     Sq. Ft.   Leased      1997       1998   Tenants   Principal Tenant      Expiration
------------------------------------------------------------------------------------------------------------------------------------
Somerset, NJ            178,500  $14,513,000   $81.31       95%        2%        8%       14     Merrill Lynch              6/30/00
Portland, ME            149,200   16,869,000   113.06       99%        1%        2%       14     UNUM Life Insurance Co.    1/31/01
Tampa, FL               122,400    8,974,000    73.32       93%       34%        7%       17     Olsten Kimberly Quality    2/28/97
                                                                                                 Care
Boston, MA              111,000   10,237,000    92.23       93%       13%       12%        7     Cambridge Associates       4/26/99
Framingham, MA          109,000    7,122,000    65.34       93%       29%       15%       26     IDG Expo                  11/30/99
Portland, ME            104,700   12,114,000   115.81       98%        1%       11%       10     People's Bank              7/31/04
Andover, MA              97,700    7,688,000    78.69       95%       --         3%       11     Computer Associates       12/31/02
Ann Arbor, MI            81,200    6,514,000    80.22      100%        2%        5%        3     Comshare                   2/28/05
Naperville, IL           65,300    4,257,000    65.19      100%        7%       17%       15     Eby Brown                  7/31/04
Greenville, SC           48,700    2,134,000    43.82       94%       28%       17%       25     S.C. Tax Commission        6/30/01
Greenville, SC           46,300    1,590,000    34.34      100%       --        26%        6     S.C. Voc. Rehab. Dept.    11/30/98
Boston, MA               37,600    2,588,000    68.83       81%        6%        6%       13     ML Securities              9/30/99
Boston, MA               27,100    1,588,000    58.60       98%       22%       44%       10     N. E. Realty Resources    11/03/03
Charlotte, NC            16,300      948,000    58.16      100%       47%        --        2     Comprehensive Medical      3/31/97
------------------------------------------------------------------------------------------------------------------------------------
Total                 1,195,000  $97,136,000   $81.29       96%       11%       10%      173
====================================================================================================================================
RETAIL
------------------------------------------------------------------------------------------------------------------------------------
Aurora, IL              313,100  $26,480,000   $84.57       75%        3%       18%       24      Best Buy                   8/31/10
Baltimore, MD           134,800    6,396,000    47.45      100%        --        7%       14      Kmart Corp.               11/30/05
Nashville, TN           111,400    3,681,000    33.04       95%        1%        7%        8      Burlington Coat Factory    1/31/10
Peabody, MA             106,900   10,139,000    94.85      100%        --        --        1      Bradlees                  10/31/16
Temple Terrace, FL      100,500    7,863,000    78.24       91%        1%        8%       18      Publix Supermarket        11/30/06
Hagerstown, MD           40,200    1,387,000    34.50      100%        --        --        1      Giant Food Stores, Inc.   12/31/04
------------------------------------------------------------------------------------------------------------------------------------
Total                   806,900  $55,946,000   $69.33       88%        1%       10%      66
====================================================================================================================================

</TABLE>


<TABLE>
<CAPTION>
====================================================================================================================================
                                   Net Carrying Value     Percentage
APARTMENT                 Units   Dollars     Per Unit      Leased
------------------------------------------------------------------------------------------------------------------------------------
<S>                         <C>   <C>          <C>            <C>
Harrison Township, MI       376   $7,418,000   $19,729        96%
Bloomfield Hills, MI        346   13,938,000    40,283       100%
Tampa, FL                   264    7,552,000    28,606        94%
Laurel, MD                  237   11,066,000    46,692        93%
Tampa, FL                   112    4,943,000    44,134        98%
------------------------------------------------------------------------------------------------------------------------------------
Total                     1,335  $44,917,000   $33,646        96%
====================================================================================================================================
                                   Net Carrying Value
OTHER                             Dollars
------------------------------------------------------------------------------------------------------------------------------------
Land                              $2,773,000
Partnership                           16,000
------------------------------------------------------------------------------------------------------------------------------------
Total                             $2,789,000
====================================================================================================================================

</TABLE>


Note:    See Note 2 of the Notes to Consolidated Financial Statements included 
under Item 14 of this Report.


                                      -11-
<PAGE>



              Reference is made to Notes 1, 2 and 3 in the Notes to the
Consolidated Financial Statements and Schedule III of the Financial Statement
Schedule for descriptions of the Trust's investments and properties.

Executive Office.
----------------
              The Trust's headquarters, at One Winthrop Square, Boston,
Massachusetts, includes approximately 9,320 square feet. The building is owned
by the Trust and, accordingly, no rent expense or rental income has been
recorded since occupying the space in April of 1996.

Item 3.       Legal Proceedings.
------        -----------------
              There are no material legal proceedings to which the Trust or any
of its subsidiaries are a party or with respect to which any of their property
is subject.

Item 4.       Submission of Matters to a
------        Vote of Security Holders.
              ------------------------
              Not applicable.


                                      -12-
<PAGE>


                                     PART II
                                     -------


Item 5.       Market for Registrant's Common Equity
------        and Related Stockholder Matters.
              -------------------------------

              (a)  Market Information and Dividends.

              The principal market on which the Trust's common shares are traded
is the New York Stock Exchange, under the symbol MGI. The table below sets
forth, for the fiscal quarters indicated, the high and low sales prices on the
New York Stock Exchange of the Trust's common shares and dividends paid per
common share.


<TABLE>
<CAPTION>

                                                    Sales Price
           Fiscal                      -------------------------------------
            1996                       High                          Low                        Dividends
            ----                       ----                          ---                        ---------
<S>                                    <C>                           <C>                          <C> 
First Quarter                          17 1/4                        15 7/8                       $.24
Second Quarter                         17 1/2                        16 1/4                       $.24
Third Quarter                          18 5/8                        16 5/8                       $.25
Fourth Quarter                         20 3/8                        18 1/8                       $.25


                                                  Sales Price
                                       -------------------------------------
           Fiscal
            1995                       High                          Low                        Dividends
            ----                       ----                          ---                        ---------

First Quarter                          14 7/8                        13 3/8                       $.22
Second Quarter                         15 1/2                        14 1/8                       $.22
Third Quarter                          15 1/8                        14                           $.23
Fourth Quarter                         16 1/8                        14 7/8                       $.23

</TABLE>


              On December 19, 1996, the Board of Trustees declared a dividend of
$.27 per share payable on January 10, 1997 to shareholders of record on January
2, 1997.

              Future dividends will be determined by the Trust's Board of
Trustees and will be dependent upon the earnings, financial position and cash
requirements of the Trust and other relevant factors existing at the time. The
Trust must distribute at least 95% of the Trust's taxable income in order to
enable it to qualify as a real estate investment trust for tax purposes. So long
as the Trust continues to qualify as a REIT, shareholders will, therefore,
receive in the form of dividends at least 95% of the taxable income of the
Trust.

              (b)  Approximate Number of Holders of Common Shares.

                                                        Approximate Number
                                                        of Holders of Record
Title of Class                                        (as of December 31, 1996)
--------------                                        -------------------------

Common Shares, $1.00                                              2,600
   par value



                                      -13-
<PAGE>

Item 6.  Selected Financial Data
------   -----------------------
<TABLE>
<CAPTION>
====================================================================================================================================
                                                                    Five Years Ended November 30,
                                             ---------------------------------------------------------------------------------------
                                              1996             1995              1994             1993              1992
<S>                                         <C>             <C>             <C>             <C>              <C>
SUMMARY OF OPERATIONS
Rental and other income                     $54,507,000     $  44,875,000   $  43,486,000   $   36,185,000   $   27,987,000
Property operating expenses and
     real estate taxes                       20,589,000        17,423,000      17,392,000       14,284,000       11,123,000
------------------------------------------------------------------------------------------------------------------------------------
Property Operating Income                    33,918,000        27,452,000      26,094,000       21,901,000       16,864,000
Interest income                                 421,000           514,000         394,000          713,000        2,602,000
Less expenses:
Depreciation and amortization                 9,463,000         8,339,000       8,116,000        7,407,000        6,315,000
Interest                                      9,198,000         5,807,000       5,781,000        5,059,000        5,511,000
General and administrative                    2,873,000         2,651,000       2,580,000        2,191,000        2,036,000
------------------------------------------------------------------------------------------------------------------------------------
Income before net gains                      12,805,000        11,169,000      10,011,000        7,957,000        5,604,000
Net gains                                    11,500,000         3,150,000       4,480,000              --         1,644,000
------------------------------------------------------------------------------------------------------------------------------------
Net income                                $  24,305,000     $  14,319,000  $   14,491,000    $   7,957,000   $    7,248,000
====================================================================================================================================
Net income per share                             $2.11              $1.25           $1.26           $  .75           $  .77
====================================================================================================================================
Dividends per share                             $  .98              $ .90          $  .86           $  .81           $  .80
====================================================================================================================================
Funds from operations                      $22,169,000      $  19,492,000   $  18,111,000     $ 15,346,000    $  11,899,000
====================================================================================================================================
Weighted average shares outstanding         11,540,972         11,487,677      11,450,451       10,574,104        9,402,476
====================================================================================================================================
SUMMARY OF FINANCIAL POSITION
Investments in real estate, at cost        $356,024,000      $293,469,000    $267,530,000     $258,663,000     $209,905,000
------------------------------------------------------------------------------------------------------------------------------------
Total assets                               $339,664,000      $274,651,000    $255,971,000     $246,700,000     $214,161,000
------------------------------------------------------------------------------------------------------------------------------------
Mortgage loans payable                     $138,547,000     $  84,506,000    $ 70,954,000     $ 66,949,000    $  60,571,000
------------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity                 $194,435,000      $180,540,000    $176,095,000     $171,039,000     $145,748,000
====================================================================================================================================
</TABLE>

Note:
Reference is made to the Index to Consolidated Financial Statements filed as
part of this report under Item 14. Item 6, Selected Financial Data, should be
read in conjunction with the Consolidated Financial Statements and the related
notes appearing elsewhere herein.


                                      -14-
<PAGE>


Item 7.       Management's Discussion and Analysis of
              Financial Condition and Results of Operations
              ---------------------------------------------

OVERVIEW

         MGI is a self-administered equity REIT that owns and operates a
diversified portfolio of income producing real estate consisting of 55
commercial properties and five multifamily residential properties. Since 1992,
the Trust has focused on the commercial segment of the real estate market,
specifically industrial and office properties located in New England. At
November 30, 1996, 48.2%, based upon cost, of MGI's real estate assets were
located in New England. As of such date, the Trust's commercial properties were
leased to 307 tenants and aggregated 5,091,000 square feet (2,000,000
industrial, 1,089,000 office/research and development, 1,195,000 office, and
807,000 retail). The multi-family properties consist of five wholly-owned
residential communities aggregating 1,335 units. At November 30, 1996, the
commercial and residential properties were 96.3% and 96.8% leased, respectively.

         During 1996, the Trust acquired six Massachusetts properties and a
Portland, Maine office complex ("Portland Square Acquisition". The Portland
Square Acquisition consists of 253,900 square feet of leaseable space located in
two buildings and a 523-space surface parking lot. With the exception of the
Portland Square Acquisition which was made subject to existing mortgages
aggregating $21.3 million, the 1996 acquisitions were purchased with cash
generated from Trust operations, new borrowings and the proceeds from the sale
of real estate investments. A summary of the 1996 real estate acquisitions is as
follows:

<TABLE>
<CAPTION>
                                                                          Date            Square
Property Type                         Location                          Acquired           Feet             Cost
-------------                         --------                          --------           ----             ----
<S>                          <C>                                          <C>               <C>           <C>         
Industrial                   Franklin, Massachusetts                      12/95             83,500        $  3,855,000
                             Marlborough, Massachusetts                   12/95             75,000           2,823,000
                             Franklin, Massachusetts                      12/95             65,300           3,229,000
                             Franklin, Massachusetts                       8/96            100,000           5,092,000
Office/R&D                   Tewksbury, Massachusetts                      3/96            140,000           8,929,000
                             Andover, Massachusetts                        7/96             60,600           3,989,000
Office                       Portland, Maine                               7/96            149,200          16,946,000
                             Portland, Maine                               7/96            104,700          12,178,000
Other (Land)                 Portland, Maine                               7/96                 --           2,321,000
                             Other                                        12/95                 --             427,000
                                                                                           -------         -----------
Total                                                                                      778,300         $59,789,000
                                                                                           =======         ===========

</TABLE>

         During 1995, MGI invested an aggregate of $38.3 million to acquire
eight properties, including three office and five industrial buildings, and
completed the acquisition of a retail building. These properties aggregated
795,300 square feet and are all located in Massachusetts.

         At November 30, 1996 the Trust's portfolio of New England investments
totaled 32 properties having an aggregate cost of $171.6 million, which
represents 48.2% of the Trust's investment in real estate based upon cost, and
3.1 million square feet, or 60.9% of the Trust's total commercial space.


                                      -15-
<PAGE>


RESULTS OF OPERATIONS

1996 Compared to 1995

         Net income for 1996 of $24.3 million, or $2.11 per share, included net
gains of $11.5 million, which resulted from (i) the sale of three industrial
buildings, one located in Massachusetts and two located in Ohio, and (ii) the
sale of the Trust's partnership interest in a San Bruno, California apartment
complex. The sale of the partnership interest resulted in a gain of $9.4
million, which included a previously deferred gain of $3.7 million. Net income
for 1995 was $14.3 million, or $1.25 per share, which included net gains from
property sales of $3.2 million. Income before net gains increased from $11.2
million in 1995 to $12.8 million in 1996.

         Funds from operations ("FFO") in 1996 totaled $22.2 million, compared
to $19.5 million in 1995. In 1996, MGI implemented the National Association of
Real Estate Investment Trusts, Inc.'s ("NAREIT") recommended changes in the
calculation of FFO. MGI calculates FFO in conformity with the NAREIT definition,
which is net income (computed in accordance with generally accepted accounting
principles), excluding gains (or losses) from debt restructuring and sales of
property, plus depreciation and amortization and after adjustments for
unconsolidated partnerships and joint ventures. The NAREIT definition
stipulates, among other things, that in calculating FFO, leasing costs should be
capitalized and not deducted as an expense. This had the effect of increasing
the Trust's FFO by approximately $0.6 million in 1996 and $0.5 million in 1995.
MGI believes FFO is an appropriate supplemental measure of operating
performance.

         The following is a reconciliation of net income to funds from
operations:

                                            Years Ended November 30,
                                            ------------------------
                                          1995                   1996
                                          ----                   ----
Net income                             $14,319,000            $24,305,000
Less net gains                          (3,150,000)           (11,500,000)
Plus building depreciation               6,840,000              7,337,000
Plus tenant improvement and
   commission amortization               1,483,000              2,027,000
                                       -----------            -----------

Funds from operations                  $19,492,000            $22,169,000
                                       ===========            ===========

         The increase in income before net gains from 1995 to 1996 resulted
principally from a $6.5 million increase in property operating income (which is
defined as rental and other income less property operating expenses and real
estate taxes), offset by increases in interest and depreciation expense. The
increase in interest expense of $3.4 million was due primarily to debt incurred
in connection with the acquisition of properties. Depreciation and amortization
increased by $1.1 million, reflecting the greater number of properties owned.
Additionally, general and administrative costs increased by $0.2 million,
primarily reflecting higher personnel costs. The change in 1996 FFO, when
compared to 1995, is attributable to the same factors that affected income
before net gains in such periods, excluding the effect of changes in
depreciation and amortization expense.

         The change in property operating income from 1995 to 1996 reflects
improved results from comparable properties (which is defined as properties
owned throughout both 1995 and 1996), as well as the effect of the sale and
acquisition of properties, as detailed below. Income growth from comparable
properties is largely due to improved performance from the Trust's 




                                      -16-
<PAGE>

comparable office properties, which generally experienced lower vacancy and
slightly higher rental rates, offset in part by increased operating expenses.

                                                       Net Change
                                                       ----------
1996 and 1995 comparable properties                   $   615,000
1996 and 1995 acquisitions                              7,346,000
1996 and 1995 sales                                    (1,495,000)
                                                       ----------

Total                                                  $6,466,000
                                                       ==========


         The following table describes the changes in property operating income
from 1995 to 1996 attributable to the Trust's different property types,
including a breakdown of New England and non-New England properties:

<TABLE>
<CAPTION>

                                                                Non-
                                        New England         New England
Property Type                            Properties          Properties          Net Change
-------------                            ----------          ----------          ----------
<S>                                      <C>               <C>                  <C>       
Industrial                               $2,478,000        $(174,000)           $2,304,000
Office/Research and Development           1,767,000               --             1,767,000
Office                                    1,820,000          675,000             2,495,000
Multifamily                                      --       (1,055,000)           (1,055,000)
Retail                                    1,048,000           26,000             1,074,000
Other (Land and Partnership)                149,000         (268,000)             (119,000)
                                         ----------        ---------            ----------

Total                                     $7,262,000       $(796,000)           $6,466,000
                                         ===========       =========            ==========

</TABLE>

         New England properties represented approximately 50% of total operating
income for the year ended November 30, 1996. The changes in industrial and
office/research and development property operating income relating to New
England properties was primarily due to the increase in the number of properties
owned in New England. The increase in office property operating income relating
to New England properties was primarily due to the Portland Square Acquisition,
which contributed $1.4 million to the net change. The increase in the retail 
segment was largely due to the contribution of Bradlees, Inc.'s store in 
Peabody, Massachusetts, which began paying rent in November 1995 following the
affirmation of its lease under Chapter 11 of the Federal Bankruptcy Code.

         The primary factor in the decline in property operating income from
industrial properties located outside New England was a decrease from an
overall 100% leased rate at November 30, 1995 to an overall 98.0% leased rate at
November 30, 1996. Higher revenues from the non-New England office buildings
contributed to the increase in office properties operating income. The decrease
in operating income from 1995 to 1996 in the multifamily segment is largely due
to the sale of the Posada del Rey Apartments in Metairie, Louisiana in September
1995. The decrease in property operating income from the non-New England other
properties was directly related to the sale of a partnership interest in a San
Bruno, California apartment complex.



                                      -17-
<PAGE>

         Commercial leases signed in 1996, the percentage of the commercial
properties leased and scheduled lease commercial expirations in 1997 and 1998
(in square feet) are as follows:

<TABLE>
<CAPTION>

                       1996            Leased at              Scheduled Expirations
Property Type         Leasing       November 30, 1996         1997             1998
-------------         -------       -----------------        -------        ---------
<S>                   <C>                <C>                 <C>             <C>    
Industrial            473,600            97.9%               333,400         528,400
Office/R&D             18,500           100.0%                 6,600         283,600
Office                252,100            95.7%               127,600         121,200
Retail                 50,800            88.3%                11,300          81,200
                      -------            -----              --------          ------

Total                 795,000            96.3%               478,900       1,014,400
                      =======            =====               =======       =========
</TABLE>


         Scheduled expirations in 1997 represent 9.4% of the Trust's total
commercial square feet at November 30, 1996, compared to scheduled expirations
in 1996 of 525,400 square feet, which represented 11.7% of the Trust's total
commercial square feet at November 30, 1995. The Massachusetts and Maine
properties were approximately 98% and 99% leased at November 30, 1996. There are
no significant leases relating to the Maine properties scheduled to expire
during 1997 and 1998. In the Trust's Massachusetts portfolio, leases relating to
152,000 and 458,000 square feet are scheduled to expire in 1997 and 1998,
respectively, which management believes are subject to rents that are generally
below the current market. In the St. Louis market, the Trust has 242,000 square
feet under leases that are scheduled to expire in 1997, of which 200,600 square
feet pertains to a single lease that contains a one-year extension option at a
rate which management believes to be slightly below the current market rent for
the area.

1995 Compared to 1994

         Net income for 1995 of $14.3 million, or $1.25 per share, included a
net gain of $3.2 million, which resulted from the sale of real estate
investments. Net income for 1994 was $14.5 million, or $1.26 per share, which
included a net gain of $4.5 million, resulting from the sale of real estate
investments. Income before net gains increased by $1.2 million to $11.2 million
in 1995, compared to $10.0 million in 1994. FFO in 1995 totaled $19.5 million,
compared to $18.1 million in 1994. FFO for 1995 and 1994 have been restated to
conform with NAREIT's recommended changes in the calculations of FFO previously
described.

         The increase in income before net gains and FFO from 1994 to 1995
resulted principally from an increase in property operating income. The change
in property operating income reflects improved results from properties owned
throughout both 1994 and 1995, as well as the effect of the sale and acquisition
of properties as detailed below:


                                                          Net Change
                                                          ----------
1995 and 1994 comparable properties                      $   900,000
1995 and 1994 acquisitions                                 3,200,000
1995 and 1994 sales                                       (2,700,000)
                                                         -----------

Total                                                     $1,400,000



                                      -18-
<PAGE>



The change in operating income with respect to each of the property types
generally derives from the Trust's pattern of acquisitions and sales, as
detailed below:


Property Type                                              Net Change
-------------                                              ----------
Industrial                                                $  (100,000)
Office/Research and Development                             1,300,000
Office                                                        660,000
Multifamily                                                  (490,000)
Retail                                                       (150,000)
Other (Land and Partnership)                                  180,000
                                                           ----------
Total                                                      $1,400,000
                                                           ==========

         The income growth in the office/research and development segment was
primarily due to acquisitions completed during 1995 and 1994. These properties
were near or at 100% occupancy throughout 1995. The increase in the property
income in the office segment reflects $0.3 million from the 1995 acquisitions
and a $0.3 million increase generated from the comparable properties. The 1995
acquisitions of office properties totaled 162,500 square feet and brought the
Trust's office portfolio to 932,600 square feet at November 30, 1995. The
increase in operating income from comparable office properties was due to an
improvement in occupancy and, to a lesser extent, rental rates.

         The change in the multifamily segment reflects improved results from
comparable properties offset by the effect of property sales in 1995 and 1994.
The comparable properties experienced a 4.5% increase in revenue, principally
from an increase in rental rates, while operating expenses were relatively
unchanged from 1994. This resulted in an increase in operating income of $0.4
million from 1994 to 1995 which was offset by the loss of income of $0.9 million
from properties sold. The Trust's interest in a Metairie, Louisiana apartment
complex, which was sold in September 1995 for $12.0 million, had generated $1.1
million of operating income for the ten months it was owned during 1995.
Operating income in the retail segment decreased slightly in 1995 due to charges
associated with tenant terminations. The Trust executed leases relating to
657,500 square feet of commercial space during 1995.

         Also contributing to the change in income before net gains and FFO is
an increase in interest income from 1994 to 1995, which was due generally to
higher interest rates on short-term investments during 1995. Depreciation
expense increased due to the increase in the number of properties owned.

LIQUIDITY

         Shareholders' equity at November 30, 1996 was $194.4 million, compared
to $180.5 million at November 30, 1995. The increase primarily reflects net
income in excess of dividends. At November 30, 1996 financial liquidity was
provided by $15.1 million in cash and cash equivalents and by $17.0 million
available under lines of credit aggregating $45.0 million. The principal sources
and uses of cash in 1996 are summarized as follows. The Portland Square
Acquisition was acquired subject to $21.3 million of existing mortgage debt
which is not included in the following table:



                                      -19-
<PAGE>


Sources of Cash
---------------

Trust operations                                               $21,000,000
Sales of real estate, net                                       11,100,000
New borrowings, net of fees,
    prepayments and amortization                                32,500,000
                                                                ----------
Total                                                          $64,600,000
                                                                ==========
Uses of Cash

Real estate acquisitions                                       $38,700,000
Dividends                                                       11,300,000
Additions to real estate                                         5,900,000
Other                                                              600,000
                                                                ----------

Total                                                          $56,500,000
                                                                ==========

         Mortgage loans payable totaled $138.5 million at November 30, 1996, a
net increase of $54.0 million from $84.5 million at November 30, 1995. The
change represents a combination of the addition of three mortgage loans totaling
$19.0 million, the $21.3 million of debt associated with the Portland Square
Acquisition and additional draws totaling $16.0 million under lines of credit
which, in the aggregate, were offset by scheduled loan repayments totaling $2.3
million. Scheduled loan repayments due during 1997 total $3.1 million. MGI
believes it will continue to be able to extend or refinance maturing mortgage
loans upon satisfactory terms.

         Additional cash requirements in 1997 will include distributions to
shareholders, capital and tenant improvements and leasing expenditures. During
1996, expenditures for capital and tenant improvements totaled $3.2 million and
$2.7 million, respectively. Included in the amount for capital improvements are
$1.9 million of costs associated with building renovations. During 1997,
budgeted renovation costs are anticipated to aggregate $1.8 million.
Additionally, the Trust has estimated that recurring capital expenditures in
1997 will total $2.0 million, including $0.9 million which pertains to interior
and exterior improvements of its multifamily complexes and $1.1 million for its
commercial properties. Tenant improvements relating to anticipated leasing
activity are budgeted at $4.0 million in 1997.

         In December 1996, MGI acquired for $6.6 million two Flex buildings,
which are 100.0% leased. The acquisition completed a tax-deferred exchange. In
addition, MGI entered into an agreement to refinance the existing $12.3 million,
9.3% loan secured by its investment in One Portland Square and an adjacent
parking lot in Portland, Maine, with an $11.0 million, fixed rate non-recourse
loan bearing interest at a rate of 8.1% and having a term of 10 years. In
connection with the repayment of the existing loan, a prepayment fee of $0.3
million will be incurred upon completion of the refinancing.

         Sources of funds in the future are expected to be from property
operations, mortgaging or refinancing of existing mortgages on properties,
borrowing under MGI's lines of credit and MGI's portfolio of investment
securities. Other potential sources of funds include the proceeds of public or
private offerings of additional equity or debt securities or the sale of real
estate investments. It is presently anticipated that the purchase of additional
properties in 1997 will be primarily financed by debt and, to a lesser extent,
by cash flow from operations, short-term 




                                      -20-
<PAGE>

investments and the proceeds, if any, from the sale of real estate or of equity
and debt securities. MGI believes the combination of available cash and cash 
equivalents, the value of MGI's unencumbered properties and other resources are
sufficient to meet its short- and long-term liquidity requirements.

OTHER

           During the past three years, the impact of inflation on MGI's
operations and investment activity has not been significant.

           Real estate investments and operations are subject to a number of
factors, including changes in general economic climate, local conditions (such
as an oversupply of space, a decline in effective rents or a reduction in the
demand for real estate), competition from other available space, the ability of
the owner to provide adequate maintenance or to fund capital and tenant
improvements required to maintain market position and control of operating
costs. In certain markets in which the Trust owns real estate, overbuilding and
local or national economic conditions have, in the past, combined to produce
lower effective rents and/or longer absorption periods for vacant space. As the
Trust re-leases space, certain effective rents may be less than those earned
previously. Management believes its modest diversification by region and
property type and its diverse tenant base somewhat reduce the risks associated
with these factors and enhances opportunities for cash flow growth and capital
gains potential, although there can be no assurance thereof.

New Accounting Pronouncements

         Effective December 1, 1996, the Trust will adopt SFAS No. 121 and 123,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of and Accounting for Stock-Based Compensation. Management does not
expect implementation of either statement to have a material effect on the
financial statements of the Trust.

Forward-Looking Statements

         The Trust's Annual Report on Form 10-K for the year ended November 30,
1996 contains forward-looking statements, estimates or plans within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of MGI to be materially different from results or
plans expressed or implied by such forward-looking statements. Such factors
include, among other things, adverse changes in the real estate markets, risk of
default under the Trust's outstanding indebtedness due to increased borrowing;
financial condition and bankruptcy of tenants; environmental/safety
requirements; adequacy of insurance coverage; and general and local economic and
business conditions. Investors should review the more detailed risks and
uncertainties set forth under the captions Risk Factors and Competition,
Regulation and Other Factors in the Trust's Annual Report on Form 10-K for the
year ended November 30, 1996. Although the Trust believes that the assumptions
underlying the forward-looking statements contained herein are reasonable, any
of the assumptions could be inaccurate, and therefore, there can be no assurance
that the forward-looking statements included or incorporated by reference in
this Annual Report will prove to be accurate. In light of the significant
uncertainties inherent in the forward-looking statements included herein, the
inclusion of such information should not be regarded as a representation by the
Trust or any other person that the objectives and plans of the Trust will be
achieved.



                                      -21-
<PAGE>


Item 8.    Financial Statements and Supplementary Data
------     -------------------------------------------
         The financial statements and supplementary data are included under Item
14 of this Report.

Item 9.    Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure.
           ------------------------------------------------

           None.




                                      -22-
<PAGE>



                                    PART III
                                    --------

         The information required by Items 10, 11, 12 and 13 of this Part III
has been omitted from this Report since the Registrant intends to file with the
Securities and Exchange Commission a definitive proxy statement which involves
the election of Trustees not later than 120 days after the close of the
Registrant's last fiscal year.


                                      -23-
<PAGE>


                                     PART IV
                                    --------

Item 14.      Exhibits, Financial Statement Schedule
              and Reports on Form 8-K.
              --------------------------------------

         (a)  1.  CONSOLIDATED FINANCIAL STATEMENTS

INDEX
-----

Independent Auditors' Report
Financial Statements:
         Consolidated Balance Sheets, November 30, 1996 and 1995
         Consolidated Statements of Earnings, Years ended November 30, 1996,
         1995 and 1994 Consolidated Statements of Cash Flows, Years ended
         November 30, 1996, 1995 and 1994 Consolidated Statements of Changes in
         Shareholders' Equity, Years ended November 30, 1996, 1995 and 1994
         Notes to Consolidated Financial Statements

         2.  CONSOLIDATED FINANCIAL STATEMENT SCHEDULE

Financial Statement Schedule (as of or for the year ended November 30, 1996):
         Schedule III, Real Estate and Accumulated Depreciation

Exhibit XI          -    Computation of Net Income Per Share Assuming Full 
                         Dilution

Exhibit XXVII       -    Financial Data Schedule for year ended November 30, 
                         1996                          (EDGAR filing only)

Other schedules are omitted for the reasons that they are not required, are not
applicable, or the required information is set forth in the financial statements
or notes thereto.

             3.  EXHIBITS


3(a)     Second Amended and Restated Declaration of Trust, incorporated by
         reference to Exhibit 3 of the Trust's Annual Report on Form 10-K for
         the fiscal year ended November 30, 1981 (the "1981 10-K").

(b)      Certificate of First Amendment of Second Amended and Restated
         Declaration of Trust, incorporated by reference to Exhibit 3 of the
         1981 10-K.

(c)      Certificate of Second Amendment of Second Amended and Restated
         Declaration of Trust, incorporated by reference to the Trust's Report
         on Form 8-K, filed on January 13, 1983.


                                      -24-
<PAGE>


(d)      Certificate of Third Amendment of Second Amended and Restated
         Declaration of Trust, incorporated by reference to Exhibit 3(d) to
         Amendment No. 1 to the Trust's Registration Statement on Form S-2 filed
         on June 7, 1985.

(e)      Certificate of Fourth Amendment of Second Amended and Restated
         Declaration of Trust, dated October 17, 1986, incorporated by reference
         to the Trust's Annual Report on Form 10-K for the year ended November
         30, 1986.

(f)      Certificate of Fifth Amendment of Second Amended and Restated
         Declaration of Trust, dated March 25, 1987, incorporated by reference
         to Exhibit 3(f) of the Trust's Annual Report on Form 10-K for the
         fiscal year ended November 30, 1987.

(g)      Certificate of Sixth Amendment of Second Amended and Restated
         Declaration of Trust, dated February 10, 1988, incorporated by
         reference to Exhibit 4(g) of the Trust's Registration Statement on Form
         S-8 filed on May 3, 1988.

(h)      Certificate of Seventh Amendment of Second Amended and Restated
         Declaration of Trust, dated June 30, 1988, incorporated by reference to
         Exhibit 4.8 of the Trust's Registration Statement on Form S-4 filed on
         November 10, 1988 (Reg.
         No.  33-25495).

(i)      Certificate of Eighth Amendment of Second Amended and Restated
         Declaration of Trust, dated March 27, 1989, incorporated by reference
         to Exhibit 3(i) of the Trust's Annual Report on Form 10-K for the
         fiscal year ended November 30, 1989 (the "1989 10-K").

(j)      By-Laws, incorporated by reference to the Trust's Report on Form 8-K, 
         filed on January 12, 1983.

(k)      Certificate of Amendment of By-Laws, dated March 21, 1989, incorporated
         by reference to the Trust's Report on Form 8-K dated March 21, 1989.



                                      -25-
<PAGE>

(l)      Rights Agreement, dated as of June 21, 1989 between the Trust and The
         First National Bank of Boston as Rights Agent, incorporated by
         reference to Exhibit 1 to the Trust's Registration Statement on Form
         8-A, filed on June 27, 1989.

(m)      Certificate of Vote of the Trustees Designating a Series of Preferred
         Shares, dated June 21, 1989, incorporated by reference to Exhibit 3(m)
         of the 1989 10-K.

(n)      Certificate of Eleventh Amendment of Second Amended and Restated
         Declaration of Trust which increased the authorized number of Common
         Shares from 15,000,000 to 17,500,000 incorporated by reference to
         Exhibit B to the Trust's Quarterly Report Form 10-Q for the ended May
         31, 1996.

(o)      Certificate of Twelfth Amendment of Second Amended and Restated
         Declaration of Trust which increased the authorized number of Preferred
         Shares from 2,000,000 to 6,000,000 incorporated by reference to Exhibit
         B to the Trust's Quarterly Report Form 10-Q for the quarter ended May
         31, 1996.

10(a)    Mortgage Growth Investors Incentive Stock Option Plan for Key 
         Employees, incorporated by reference to the Trust's Definitive Proxy 
         Statement dated March 15, 1982

(b)      Mortgage Growth Investors Stock 1982 Option Plan For Trustees, 
         incorporated by reference to the Trust's Definitive Proxy Statement 
         dated March 15, 1982

(c)      MGI Properties 1988 Stock Option and Stock Appreciation Rights Plans 
         for Key Employees and Trustees, incorporated by reference to the 
         Trust's Definitive Proxy Statement, dated February 19, 1988.

(d)      Amendment to MGI Properties' 1988 Stock Option and Stock Appreciation
         Rights Plan for Key Employees, dated as of December 19, 1989,
         incorporated by reference to Exhibit 10(f) of the 1989 10-K.

(e)      Amendment to MGI Properties' 1988 Stock Option Plan for Trustees, dated
         as of December 19, 1989, incorporated by reference to Exhibit 10(g) of
         the 1989 10-K.

(f)      Amended and Restated Severance Compensation Plan, dated as of December
         19, 1989, incorporated by reference to Exhibit 10(i) of the 1989 10-K.


                                      -26-
<PAGE>

(g)      MGI Properties 1994 Stock Option and Stock Appreciation Rights Plans
         for Key Employees and Trustees incorporated by reference to the Trust's
         Definitive Proxy Statement, dated February 18, 1994.

(h)      The Dividend Reinvestment and Share Purchase Plan of MGI Properties
         incorporated by reference to the Trust's Report on Form S-3, filed on
         July 1, 1994.

11       Computation of Net Income Per Share, Assuming Full Dilution, included 
         under Item 14 of this Report.

23       Auditors' consent.

                  (b)      REPORTS ON FORM 8-K:

                           Form 8-K dated July 2, 1996 Form 8-K/A filed on
                           September 16, 1996
                              amending Form 8-K dated July 2, 1996 Form 8-K
                           dated August 30, 1996 Form 8-K/A filed on November
                           15, 1996
                              amending Form 8-K dated August 30, 1996

         MGI Properties (the "Trust") is a Massachusetts business trust and all
persons dealing with the Trust must look solely to the property of the Trust for
the enforcement of any claims against the Trust. Neither the Trustees, officers,
agents nor shareholders of the Trust assume any personal liability in connection
with its business or assume any personal liability for obligations entered into
in its behalf.



                                      -27-
<PAGE>


                                POWER OF ATTORNEY
                                -----------------

         MGI Properties and each of the undersigned do hereby appoint W. Pearce
Coues and Phillip C. Vitali and each of them severally, its or his true and
lawful attorneys to execute on behalf of MGI Properties and the undersigned any
and all amendments to this Report and to file the same with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission. Each of such attorneys shall have the power to act hereunder with or
without the other.

                                   SIGNATURES
                                   ----------

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:  December 31, 1996                      MGI  PROPERTIES
                                               (Registrant)

                                               By: /s/ W. Pearce Coues
                                                   -----------------------------
                                                   W. Pearce Coues, Chairman of
                                                       the Board of Trustees

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>

               Signature                                        Title                                       Date
               ---------                                        -----                                       ----
<S>                                          <C>                                                      <C> 
/s/ W. Pearce Coues                          Chairman of the Board of Trustees and                    December 31, 1996
----------------------------------------
W. Pearce Coues                              Chief Executive Officer

/s/ Phillip C. Vitali                        Principal Financial Officer                              December 31, 1996
----------------------------------------
Phillip C. Vitali

/s/ David P. Morency                         Principal Accounting Officer                             December 31, 1996
----------------------------------------
David P. Morency

/s/ George S. Bissell                                         Trustee                                 December 31, 1996
----------------------------------------
George S. Bissell

/s/ Herbert D. Conant                                         Trustee                                 December 31, 1996
----------------------------------------
Herbert D. Conant

/s/ Francis P. Gunning                                        Trustee                                 December 31, 1996
----------------------------------------
Francis P. Gunning

/s/ Colin C. Hampton                                          Trustee                                 December 31, 1996
----------------------------------------
Colin C. Hampton

/s/ George M. Lovejoy, Jr.                                    Trustee                                 December 31, 1996
----------------------------------------
George M. Lovejoy, Jr.
                                                              Trustee                                 December 31, 1996

----------------------------------------
William F. Murdoch, Jr.

/s/ Rodger P. Nordblom                                        Trustee                                 December 31, 1996
----------------------------------------
Rodger P. Nordblom

</TABLE>


                                      -28-


<PAGE>


                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                   ITEM 8 - CONSOLIDATED FINANCIAL STATEMENTS
                                November 30, 1996

                                 MGI PROPERTIES



<PAGE>

                                 MGI PROPERTIES

            Index to Consolidated Financial Statements and Schedules

<TABLE>
<CAPTION>
                                                                                      Page
                                                                                      ----
<S>                                                                             <C>

Independent Auditors' Report                                                          F - 1

Financial Statements:
  Consolidated Balance Sheets,
     November 30, 1996 and 1995                                                       F - 2
  Consolidated Statements of Earnings,
     Years ended November 30, 1996, 1995 and 1994                                     F - 3
  Consolidated Statements of Cash Flows,
     Years ended November 30, 1996, 1995 and 1994                                     F - 4
  Consolidated Statements of Changes in Shareholders' Equity,
     Years ended November 30, 1996, 1995 and 1994                                     F - 5
  Notes to Consolidated Financial Statements                                     F - 6 to F - 12


Financial Statement Schedule (as of or for the year ended November 30, 1996):
  Schedule III - Real Estate and Accumulated Depreciation                       F - 13 to F - 15

Exhibit XI - Computation of Net Income Per Share, Assuming Full Dilution             F - 16
</TABLE>


Other schedules are omitted as they are not required, are not applicable, or the
required information is set forth in the consolidated financial statements or
notes thereto.


<PAGE>

                          Independent Auditors' Report


The Board of Trustees and Shareholders
MGI Properties:


We have audited the consolidated financial statements of MGI Properties and
subsidiaries as listed in the accompanying index. In connection with our audits
of the consolidated financial statements, we have also audited the financial
statement schedule as listed in the accompanying index. These consolidated
financial statements and financial statement schedule are the responsibility of
the Trust's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of MGI Properties and
subsidiaries as of November 30, 1996 and 1995, and the results of their
operations and their cash flows for each of the years in the three-year period
ended November 30, 1996 in conformity with generally accepted accounting
principles. Also in our opinion, the related financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly, in all material respects, the information set forth
therein.


                                  /s/ KPMG Peat Marwick LLP



Boston, Massachusetts
December 19, 1996


                                      F-1


<PAGE>

                                 MGI PROPERTIES

                           Consolidated Balance Sheets

                           November 30, 1996 and 1995


                        Assets                    1996              1995

Real estate, at cost (notes 2, 3 and 4)       $356,024,000     $293,469,000
Accumulated depreciation and amortization      (44,810,000)     (36,375,000)
                                               -----------      -----------
       Net investments in real estate          311,214,000      257,094,000

Cash and cash equivalents (note 4)              15,140,000        7,045,000
Accounts receivable                              3,665,000        3,354,000
Other assets                                     9,645,000        7,158,000
                                               -----------      -----------

                                              $339,664,000     $274,651,000
                                               ===========      ===========

     Liabilities and Shareholders' Equity

Liabilities:
  Mortgage loans payable (note 4)             $138,547,000     $ 84,506,000
  Other liabilities                              6,682,000        5,905,000
                                               -----------      -----------
       Total liabilities                       145,229,000       90,411,000

Deferred gain (note 2)                                  -         3,700,000

Shareholders' equity (notes 5 and 6):
  Common shares - $1 par value:  17,500,000
     shares authorized; 11,563,199 issued 
    (11,502,271 at November 30, 1995)           11,563,000       11,502,000
     Additional paid-in capital                167,185,000      166,348,000
     Undistributed net income                   15,687,000        2,690,000
                                               -----------      -----------

               Total shareholders' equity      194,435,000      180,540,000
                                               -----------      -----------

                                              $339,664,000     $274,651,000
                                               ===========      ===========


See accompanying notes to consolidated financial statements.


                                       F-2
<PAGE>

                                 MGI PROPERTIES

                       Consolidated Statements of Earnings


                                             Year ended November 30,
                                      1996           1995             1994
Income:
  Rental and other income         $54,507,000    $44,875,000      $43,486,000
  Interest                            421,000        514,000          394,000
                                   ----------    -----------      ------------

         Total income              54,928,000     45,389,000       43,880,000
                                   ----------    -----------      ------------

Expenses:
  Property operating expenses      14,099,000     11,823,000       11,975,000
  Real estate taxes                 6,490,000      5,600,000        5,417,000
  Depreciation and amortization     9,463,000      8,339,000        8,116,000
  Interest                          9,198,000      5,807,000        5,781,000
  General and administrative        2,873,000      2,651,000        2,580,000
                                   ----------    -----------      ------------

       Total expenses              42,123,000     34,220,000       33,869,000
                                   ----------    -----------      ------------

       Income before net gains     12,805,000     11,169,000       10,011,000

Net gains (note 2)                 11,500,000      3,150,000        4,480,000
                                   ----------    -----------      ------------

       Net income                 $24,305,000    $14,319,000      $14,491,000
                                   ==========    ===========      ============

Net income per share                    $2.11          $1.25            $1.26
                                         ====          =====             ====

Weighted average shares            11,540,972     11,487,677       11,450,451
  outstanding                      ==========    ===========      ============


See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>


                                 MGI PROPERTIES

                      Consolidated Statements of Cash Flows

<TABLE>
<CAPTION>
                                                                   Year ended November 30,
                                                            1996               1995            1994
<S>                                                      <C>                <C>              <C> 
Cash flows from operating activities:
   Net income                                            $24,305,000        $14,319,000      $14,491,000
   Adjustments to reconcile net income to
     net cash provided by operating activities:
       Depreciation and amortization                       9,463,000          8,339,000        8,116,000
       Net gains                                         (11,500,000)        (3,150,000)       4,480,000)
       Other                                              (1,231,000)          (202,000)        (706,000)
                                                        -------------       -----------       -----------
            Net cash provided by operating
              activities                                  21,037,000         19,306,000        17,421,000
                                                        -------------       ------------      -----------

Cash flows from investing activities:
   Acquisitions of real estate                           (38,667,000)       (38,302,000)      (31,786,000)
   Additions to real estate                               (3,234,000)        (1,825,000)       (2,157,000)
   Tenant improvements                                    (2,702,000)        (2,542,000)       (1,051,000)
   Deferred tenant charges                                (1,348,000)        (1,634,000)         (581,000)
   Net proceeds from sales of real estate interests       11,103,000         16,902,000        15,020,000
   Other                                                      35,000           (289,000)           58,000
                                                        -------------       ------------      ------------
            Net cash used in investing
              activities                                 (34,813,000)       (27,690,000)      (20,497,000)
                                                        -------------       ------------      ------------

Cash flows from financing activities:
   Proceeds from sale of common shares                       678,000            322,000           251,000
   Repayment of mortgage loans payable                    (2,242,000)       (25,473,000)      (10,439,000)
   Additions to mortgage loans payable                    34,743,000         38,025,000        24,188,000
   Cash distributions paid                               (11,308,000)       (10,337,000)       (9,848,000)
                                                        -------------       ------------      ------------
           Net cash provided by financing
             activities                                  21,871,000           2,537,000         4,152,000
                                                        -------------       ------------      ------------

           Net increase (decrease) in cash and
             cash equivalents                             8,095,000          (5,847,000)        1,076,000

Cash and cash equivalents:
  Beginning of year                                       7,045,000          12,892,000        11,816,000
                                                        ------------        ------------      ------------
  End of year                                           $15,140,000          $7,045,000       $12,892,000
                                                        ============        ============      ============
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>


                                 MGI PROPERTIES

           Consolidated Statements of Changes in Shareholders' Equity

<TABLE>
<CAPTION>
                                                                                     Undistributed
                                                                      Additional     (distributions
                                                       Common          paid-in       in excess of)
                                                       shares          capital        net income
<S>                                                   <C>             <C>              <C>

Balance at November 30, 1993                          $11,448,000     $165,673,000     $(5,935,000)

  Net income                                                   -                -       14,491,000
  Dividend reinvestment and            
     share purchase plan (note 5)                           4,000           57,000              -
  Distributions (note 6)                                       -                -       (9,848,000)
  Options exercised and other                              14,000          191,000              -
                                                       ----------     ------------     ----------

Balance at November 30, 1994                           11,466,000      165,921,000      (1,292,000)

  Net income                                                   -                -       14,319,000
  Dividend reinvestment and               
     share purchase plan (note 5)                          19,000          250,000              -
  Distributions (note 6)                                       -                -      (10,337,000)
  Options exercised and other                              17,000          177,000              -
                                                       ----------     ------------     ----------

Balance at November 30, 1995                           11,502,000      166,348,000       2,690,000

  Net income                                                   -                -       24,305,000
  Dividend reinvestment and                 
     share purchase plan (note 5)                          23,000          357,000              -
  Distributions (note 6)                                       -                -      (11,308,000)
  Options exercised and other                              38,000          480,000              -
                                                       ----------     ------------     ----------

Balance at November 30, 1996                          $11,563,000     $167,185,000     $15,687,000
                                                       ==========     ============     ===========
</TABLE>


See accompanying notes to consolidated financial statements.


                                      F-5
<PAGE>

                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


(1) Summary of Significant Accounting Policies

     (a) Consolidation
     The consolidated financial statements of the Trust include the accounts of
         its wholly-owned subsidiaries. All significant intercompany accounts
         and transactions have been eliminated in consolidation.

     (b) Income Taxes
     The Trust intends to continue to qualify to be taxed as a real estate
         investment trust under Sections 856-860 of the Internal Revenue Code
         of 1986 and the related regulations. In order to qualify as a real
         estate investment trust for tax purposes, the Trust, among other
         things, must distribute to shareholders at least 95% of its taxable
         income. It has been the Trust's policy to distribute 100% of its
         taxable income to shareholders; accordingly, no provision has been
         made for Federal income taxes.

     (c) Income and Expense Recognition
     Income and expenses are recorded using the accrual method of accounting for
         financial reporting and tax purposes. Income or loss from real estate
         partnerships is accounted for according to generally accepted
         accounting principles using either the cost method or the equity
         method.

     (d) Real Estate
     Real estate investments, excluding land costs, are depreciated using the
         straight-line method over estimated useful lives of 20 to 40 years.
         Tenant improvements are amortized over the shorter of their estimated
         useful lives or lease terms ranging from 1 to 20 years. Equipment is
         depreciated over a range from 5 to 20 years. Maintenance and repairs
         are charged to expense as incurred; major improvements are
         capitalized.

     On March 31, 1995, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 121, Accounting for
         the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
         Disposed Of, which provides guidance for recognition and measurement
         of impairment of long-lived assets. Statement No. 121 is effective for
         financial statements issued for fiscal years beginning after 
         December 15, 1995, i.e., for fiscal 1997. Management does not expect
         implementation of Statement No. 121 to have a material effect on the
         financial statements of the Trust.

     (e) Statements of Cash Flows
     For purposes of the statements of cash flows, short-term investments with
         a maturity, at date of purchase, of three months or less are
         considered to be cash equivalents.

     During 1996, the Trust acquired nine properties subject to an aggregate of
         $21.3 million of existing debt. During 1994, the Trust sold seven
         industrial properties for $14.9 million in a single transaction. The
         properties were secured by a $10.2 million loan payable which was
         assigned to the purchaser at closing. Only the cash portion of the
         transactions are reflected in the accompanying consolidated statement
         of cash flows.

     Cash interest payments of $9.1 million, $6.5 million and $5.8 million were
         made for the years ended November 30, 1996, 1995 and 1994,
         respectively. During 1995, the Trust capitalized interest of $.4
         million.

                                                                     (Continued)




                                      F-6
<PAGE>

                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


     (f) Fair Value of Financial Instruments
     The Trust estimated the fair values of its financial instruments at
         November 30, 1996 using discounted cash flow analysis and quoted
         market prices. Such financial instruments include short-term
         investments, U.S. Government securities, mortgage loans payable and
         mortgage notes receivable which were received in connection with
         transactions not qualifying as sales for financial accounting purposes
         and accordingly not reflected in the Trust's consolidated balance
         sheet. The excess of the aggregate fair value of the Trust's financial
         instruments over their aggregate carrying amounts is not material.

     (g) Net Income Per Share
     Net income per share is computed based on the weighted average number of
         common shares outstanding; common stock equivalents are not dilutive.

     (h) 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.

     (i) Reclassifications

     Certain prior year amounts have been reclassified to conform with the
         current year presentation.

(2) Investments

     (a) Real Estate

     A summary of real estate investments follows:

<TABLE>
<CAPTION>
                                                   
                                                   Accumulated
                                   Buildings       depreciation        Net carrying amount
    Type of                            and              and            -------------------
  investment           Land       improvements     amortization        1996           1995
  ----------           ----       ------------     ------------        ----           ----
<S>                 <C>            <C>             <C>             <C>           <C> 

Office              $17,889,000    $ 93,726,000    $14,479,000    $ 97,136,000   $ 67,021,000
Office/Research     
  and Development     9,913,000      41,484,000      2,169,000      49,228,000     37,293,000
Industrial           14,293,000      51,110,000      4,205,000      61,198,000     49,942,000
Retail               23,647,000      40,627,000      8,328,000      55,946,000     57,206,000
Apartment             8,666,000      51,880,000     15,629,000      44,917,000     45,365,000
Other                 2,761,000          28,000             -        2,789,000        267,000
                     ----------     -----------     ----------     -----------    -----------
                    $77,169,000    $278,855,000    $44,810,000    $311,214,000   $257,094,000
                    ===========    ============    ===========    ============   ============
</TABLE>

At November 30, 1996, on the basis of the net book value of real estate, 53.2%
   of real estate investments were located in New England, with 23.1% in the
   Mid-West, 13.0% in the Southeast and 10.7% in Mid-Atlantic states.

                                                                    (Continued)



                                      F-7
<PAGE>


                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


Effective August 1995, the Trust acquired title to a completed department
    store which was subject to the Trust's $10.2 million first mortgage
    construction loan. The building is being leased in its entirety by
    Bradlees, Inc. which filed for bankruptcy under Chapter 11 of the
    Federal Bankruptcy Code in June 1995. In October 1995, Bradlees
    affirmed its lease with the Trust, subsequently began paying rent,
    and is current through November 30, 1996.

In 1982, the Trust sold its investment in a Michigan apartment complex
    and received a $15.5 million purchase money mortgage in a transaction
    that did not meet the conditions for a completed sale for financial
    accounting purposes. The loan was scheduled to mature in 1995, and
    the Trust agreed to extend the maturity until January 1997. The loan
    provides for an interest rate of 7% and a provision for the Trust to
    receive at least 50% but not more than 60% of the shared appreciation
    value in excess of the outstanding note balance. In addition, the
    Trust has a 46% ownership interest, direct and indirect, in the
    partnership owning this complex. The Trust has a purchase option
    which will allow it to obtain a maximum equity interest of 100%. At
    November 30, 1996, the Trust carried this asset as a real estate
    investment at a net carrying value of $7.4 million, which excludes
    the gain from the sale.

(b) Net Gains
In 1996, the Trust recognized aggregate gains of $11.5 million from the
    sale of three industrial buildings, one located in Massachusetts and
    two in Ohio, and its partnership interest in a San Bruno, California
    apartment complex. With respect to the partnership interest, the sale
    resulted in a gain of $9.4 million, which included a previously
    deferred gain of $3.7 million.

In 1995, the Trust recognized gains of $3.2 million principally from the
    sale of one industrial building and the repayment of its loan on a
    Louisiana apartment complex that had been carried as real estate
    owned for financial reporting purposes.

In 1994, the Trust sold nine properties and one real estate partnership
    interest with an aggregate net carrying value of $20.7 million for an
    aggregate net sales price of $25.2 million, resulting in gains
    totaling $4.5 million.

Leases

All leases relating to real estate investments are operating leases;
    accordingly, rental income is reported when earned.

Future minimum lease payments on noncancelable operating leases at
    commercial properties at November 30, 1996 are: $37.5 million in
    1997, $33.3 million in 1998, $28.6 million in 1999, $22.7 million in
    2000, $16.2 million in 2001, and $81.5 million thereafter.

The above amounts do not include contingent rental income which is
    received under certain leases based upon tenant sales, ad valorem
    taxes, property operating expenses and/or costs to maintain common
    areas. Contingent rental income was $7.4 million in 1996, $5.9
    million in 1995 and $5.4 million in 1994.

Operating leases on apartments generally have a term of one year or less.

                                                                     (Continued)


                                      F-8
<PAGE>

                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements

(4)  Mortgage Loans Payable

     Mortgage loans payable at November 30 follow:
<TABLE>
<CAPTION>
                                                                       1996           1995
<S>                                                                <C>            <C> 

    Mortgage loans, maturing 2000 through 2014, at effective
       interest rates ranging from 7.5% to 9.3%                    $104,797,000   $66,756,000

    Housing revenue bond, maturing 2007, at 5.5% and
       5.7% at November 30, 1996 and 1995, respectively               5,750,000     5,750,000

    Amounts outstanding under lines of credit, at an effective 
       interest rate of 7.6% and 8.4% at November 30, 1996
       and 1995, respectively                                        28,000,000    12,000,000
                                                                    -----------    ----------

                                                                   $138,547,000   $84,506,000
                                                                    ===========    ==========

    Weighted average interest rate                                     7.95%         7.99%
                                                                       ====          ====
</TABLE>

   The mortgage loans payable are nonrecourse and are collateralized by
       certain real estate investments having a net carrying value of $162
       million and the Trust's guarantee of $4.5 million. Loans require
       monthly principal amortization and/or a balloon payment at maturity.

   The housing revenue bond is tax exempt and is secured by real estate
       having a net carrying value of $4.9 million. The bond is also secured
       by a letter of credit which is collateralized by $2.5 million of
       short-term investments and U.S. Government securities. The Trust has
       also guaranteed $3.0 million of the debt. The base interest rate
       floats weekly and was 3.5% at November 30, 1996 (an effective
       interest rate of 5.5% due to the payment of fees).

   The Trust has lines of credit aggregating $45 million which mature in
       August 1998. The lines contain restrictive covenants that, among
       other things, require the Trust to maintain certain financial ratios
       and restrict the incurrence of certain indebtedness and the making of
       certain investments. Borrowings under the lines are secured by
       mortgage and security interests in real estate having a net carrying
       value of $53.1 million and are subject to a variable interest rate. A
       fee, which does not exceed .25% per annum, is charged on the unused
       amounts.

   Principal payments on mortgage loans payable, exclusive of the lines of
       credit, due in the next five years and thereafter are as follows:
       $3.1 million in 1997, $3.4 million in 1998, $3.6 million in 1999,
       $15.5 million in 2000, $3.8 million in 2001, and $81.1 million
       thereafter.

                                                                     (Continued)


                                      F-9
<PAGE>




                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


(5) Shareholders' Equity

     (a) Stock Option Plans
     Under the Trust's 1994 and 1988 stock option plans for key employees and
          Trustees (the "Plans"), incentive stock options with or without stock
          appreciation rights or nonqualified options and related stock
          appreciation rights may be granted to employees, and nonqualified
          options may be granted to Trustees. Under the Plans, options may be
          granted at an exercise price not less than fair market value of the
          Trust's common shares on the date of grant. Changes in options
          outstanding during the years ended November 30 were as follows:

                                             1996       1995     1994

            Balance at beginning of year     669,411    549,632    464,532

                Granted                      161,500    132,000    101,000
                Exercised                    (14,500)    (7,221)   (15,900)
                Expired                       (6,000)    (5,000)        -
                                            --------    -------   -------

            Balance at end of year           810,411    669,411    549,632
                                             =======    =======    =======

            Shares reserved for granting
              future options                 296,825    458,325    590,325
                                             =======    =======    =======

     The  weighted average exercise price per option at November 30, 1996, 1995
          and 1994 was $13.68, $13.02 and $12.62, respectively. The shares
          reserved expire by April 2004 and all outstanding options expire by
          April 2006. Of the options granted in fiscal 1996, 66,250 became
          exercisable in December 1996 and 4,500 become exercisable in March
          1997. All other options outstanding are currently exercisable.
          Subsequent to November 30, 1996, 186,000 options were granted, of
          which half are currently exercisable and half are exercisable in 1997.

     Effective December 1, 1996, the Trust will adopt SFAS No. 123, Accounting
          for Stock-Based Compensation. SFAS No. 123 allows an entity to measure
          the cost of stock-based compensation plans by either a fair value
          based method of accounting or to continue to measure compensation cost
          by using the intrinsic value based method prescribed by APB Opinion
          No. 25. For those entities electing to use the intrinsic value based
          method, SFAS No. 123 requires pro forma disclosures of net income and
          earnings per share computed as if the fair value based method had been
          applied. The Trust intends to continue to account for stock-based
          compensation costs under APB Opinion No. 25 and will provide the
          additional required disclosures relating to its stock options in its
          1997 financial statements.

     (b) Shareholder Rights Plan
     On June 21, 1989, the Board of Trustees adopted a shareholder rights
          plan. Under this plan, one right was attached to each outstanding
          common share on July 5, 1989, and one right is attached to each share
          issued thereafter. Each right entitles the holder to purchase, under
          certain conditions, one one-hundredth of a share of Series A
          participating preferred stock for $60. The rights may also, under
          certain conditions, entitle the holders to receive common shares of
          the Trust, common shares of an entity acquiring the Trust, or other
          consideration, each having a value equal to twice the exercise price
          of each right ($120). One hundred fifty thousand preferred shares have
          been designated as Series A participating preferred shares and are
          reserved for issuance under the shareholder rights plan. The rights
          are redeemable by the Trust at a price of $.01 per right. If not
          exercised or redeemed, all rights expire in July 1999.

                                                                     (Continued)




                                      F-10
<PAGE>


                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


     (c) Dividend Reinvestment and Share Purchase Plan
     Under the Trust's Dividend Reinvestment and Share Purchase Plan
          shareholders of record who own 100 shares or more have the option of
          electing to receive, in full or in part, dividends in the form of MGI
          shares in lieu of cash. The price of shares purchased with reinvested
          dividends is at a 3% discount in the case of newly issued shares. If
          MGI purchases shares in the open market for the plan, the price for
          such shares is 100% of the average purchase price paid. Participants
          in the plan may make additional cash purchases of shares at the same
          price as shares purchased through the reinvestment of dividends.
          During the years ended November 30, 1996 and 1995 the Trust issued
          22,808 common shares and 18,828 common shares through its Dividend
          Reinvestment and Share Purchase Plan, respectively.

     (d) Shelf Registration
     In October 1996, the Trust filed a shelf registration with the Securities
          and Exchange Commission to register $100 million of common shares,
          preferred shares, debt securities, warrants, rights or units that the
          Trust may issue through underwriters or in privately negotiated
          transactions for cash from time to time.

     (e) Preferred Shares
     At November 30, 1996 and 1995, the Trust had authorized 6 million of
          preferred shares, $1 par value, of which none were issued.

(6) Cash Distributions

     The Trust made cash distributions of $11.3 million in 1996, $10.3 million
          in 1995 and $9.8 million in 1994, which is allocated between taxable
          ordinary income and taxable capital gain, on a per share basis, as
          follows:

                                                                       Total
                            Ordinary              Capital             Taxable
                             Income                Gain               Income

           1996               $0.56                $0.42              $0.98
           1995               $0.69                $0.21              $0.90
           1994               $0.57                $0.29              $0.86

       On  December 19, 1996, the Trust declared a dividend of $.27 per share
           payable on January 10, 1997 to shareholders of record on January 2,
           1997.

                                                                     (Continued)


                                      F-11
<PAGE>


                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


(7) Quarterly Financial Information (Unaudited)

     Quarterly results of operations for the years ended November 30, 1996 and
1995 follow:

                                           Quarter Ended
          1996           February 29    May 31       August 31    November 30

Total income             $12,784,000  $13,222,000   $14,187,000   $14,735,000
Total expenses             9,819,000   10,031,000    10,895,000    11,378,000
                          ----------   ----------    ----------    ----------
Income before net gains    2,965,000    3,191,000     3,292,000     3,357,000
Net gains                         -     9,350,000            -      2,150,000
                          ----------   ----------    ----------    ----------
Net income               $ 2,965,000  $12,541,000   $ 3,292,000   $ 5,507,000
                          ==========   ==========    ==========    ==========

Net income per share         $  .26      $  1.09      $    .28       $    .48
                                ===         ====           ===            ===

                                           Quarter Ended
          1995           February 28    May 31        August 31   November 30

Total income             $10,937,000  $11,299,000   $11,295,000   $11,858,000
Total expenses             8,331,000    8,379,000     8,462,000     9,048,000
                          ----------   ----------    ----------    ----------
Income before net gains    2,606,000    2,920,000     2,833,000     2,810,000
Net gains                  1,400,000           -             -      1,750,000
                          ----------   ----------    ----------    ----------
Net income               $ 4,006,000  $ 2,920,000   $ 2,833,000   $ 4,560,000
                          ==========   ==========    ==========    ==========

Net income per share         $  .35      $   .25      $    .25      $    .40
                                ===          ===           ===           ===

(8) Subsequent Events

 In December 1996 the Trust acquired for $6.6 million two office/research and
     development buildings totaling 145,500 square feet which are 100% leased.
     This acquisition was part of a tax deferred exchange in which approximately
     $5.0 million of the purchase price was funded with the net proceeds of two
     fourth quarter 1996 property sales. In addition, the Trust entered into an
     agreement to refinance the existing $12.3 million 9.3% loan secured by the
     Trust's interest in One Portland Square, Portland, Maine and an adjoining
     parking lot with an $11.0 million fixed rate non-recourse loan bearing
     interest at a rate of 8.12% and having a term of 10 years. In connection
     with the repayment of the existing loan, a prepayment fee of $0.3 million
     will be incurred upon completion of the refinancing.



                                      F-12
<PAGE>




                                 MGI PROPERTIES                    Schedule III
                                                                   ------------
                    Real Estate and Accumulated Depreciation

                                November 30, 1996

<TABLE>
<CAPTION>
                                                                                Gross amounts at which
                                     Initial Cost                              carried at close of period         
                       -------------------------------------     Costs      -------------------------------   
                                                  Building    capitalized             Building                
                                                     and     subsequent to               and                 
 Description           Encumbrances     Land    Improvements  acquisition   Land    Improvements      Total  
 -----------           ------------     ----    ------------  -----------   ----    ------------      -----  
<S>                    <C>          <C>         <C>          <C>         <C>         <C>          <C>

Office:
  Charlotte, NC        $     -      $   150,000 $    933,000 $   269,000 $   150,000 $  1,202,000 $  1,352,000
  Naperville, IL             -        1,400,000    3,318,000   1,569,000   1,400,000    4,887,000    6,287,000
  Greenville, SC             -          246,000    2,490,000     478,000     246,000    2,968,000    3,214,000
  Greenville, SC             -          213,000    1,647,000     708,000     253,000    2,315,000    2,568,000
  Ann Arbor, MI              -          686,000    5,618,000   1,881,000     686,000    7,499,000    8,185,000
  Tampa, FL                  -        2,667,000    8,980,000     346,000   2,667,000    9,326,000   11,993,000
  Somerset, NJ               -        3,264,000   13,379,000   1,359,000   3,264,000   14,738,000   18,002,000
  Boston, MA                (A)       1,730,000    6,925,000   2,300,000   1,730,000    9,225,000   10,955,000
  Framingham, MA            (A)       2,105,000    5,109,000     424,000   2,105,000    5,533,000    7,638,000
  Boston, MA                 -          691,000    1,145,000     816,000     691,000    1,961,000    2,652,000
  Andover, MA             4,966,000   1,263,000    6,417,000     220,000   1,263,000    6,637,000    7,900,000
  Boston, MA                 -          861,000      507,000     238,000     861,000      745,000    1,606,000
  Portland, ME           10,316,000     996,000   11,182,000      54,000     996,000   11,236,000   12,232,000
  Portland, ME            8,805,000   1,577,000   15,369,000      85,000   1,577,000   15,454,000   17,031,000
                       ------------  ---------- ------------  ---------- ----------- ------------ ------------
                         24,087,000  17,849,000   83,019,000  10,747,000  17,889,000   93,726,000  111,615,000
                       ------------  ---------- ------------ ----------- ----------- ------------ ------------

Office/Research 
  & Development:
  Billerica,  MA            (A)         376,000    1,749,000      68,000     376,000    1,817,000    2,193,000
  Bedford, MA               (A)         662,000    1,585,000           0     662,000    1,585,000    2,247,000
  Andover, MA             4,517,000   1,441,000    5,799,000       5,000   1,441,000    5,804,000    7,245,000
  Billerica, MA             (A)         752,000    3,611,000           0     752,000    3,611,000    4,363,000
  Billerica, MA             (A)         420,000    1,652,000           0     420,000    1,652,000    2,072,000
  Andover, MA             3,848,000   1,185,000    5,307,000           0   1,185,000    5,307,000    6,492,000
  Chelmsford, MA             -          354,000    1,567,000     119,000     354,000    1,686,000    2,040,000
  Billerica, MA              -          681,000    4,111,000      14,000     681,000    4,125,000    4,806,000
  Littleton, MA              -          285,000    2,091,000           0     285,000    2,091,000    2,376,000
  Chelmsford, MA             -          946,000    3,680,000       4,000     946,000    3,684,000    4,630,000
  Tewksbury, MA           4,984,000   1,640,000    7,289,000      14,000   1,640,000    7,303,000    8,943,000
  Andover, MA                -        1,171,000    2,818,000       1,000   1,171,000    2,819,000    3,990,000
                       ------------ ----------- ------------ ----------- ----------- ------------ ------------
                         13,349,000   9,913,000   41,259,000     225,000   9,913,000   41,484,000   51,397,000
                       ------------ ----------- ------------ ----------- ----------- ------------ ------------

Industrial Properties:
  N. Charleston, SC          -          300,000    2,738,000      52,000     300,000    2,790,000    3,090,000
  St. Louis, MO           1,034,000     218,000    1,171,000     252,000     218,000    1,423,000    1,641,000
  St. Louis, MO           1,078,000     360,000    1,337,000     103,000     360,000    1,440,000    1,800,000
  Bedford, MA               (A)         512,000    2,062,000      36,000     512,000    2,098,000    2,610,000
  St. Louis, MO           1,389,000     570,000    1,695,000      38,000     570,000    1,733,000    2,303,000
  St. Louis, MO             737,000     500,000      708,000           0     500,000      708,000    1,208,000
  St. Louis, MO             989,000     300,000    1,321,000           0     300,000    1,321,000    1,621,000
  St. Louis, MO           1,216,000     613,000    1,347,000      92,000     613,000    1,439,000    2,052,000
  Wilmington, MA          4,409,000   2,390,000    4,638,000     209,000   2,390,000    4,847,000    7,237,000
  Wilmington, MA            (A)       1,394,000    3,208,000      73,000   1,394,000    3,281,000    4,675,000
  Wilmington, MA            (A)         501,000    2,013,000      61,000     501,000    2,074,000    2,575,000
  St. Louis, MO           2,527,000     526,000    3,617,000           0     526,000    3,617,000    4,143,000
  Tewksbury,  MA          8,804,000   1,739,000    8,994,000       1,000   1,739,000    8,995,000   10,734,000
  Northborough, MA           -          514,000    1,810,000      22,000     514,000    1,832,000    2,346,000
  Marlborough, MA            -        1,040,000    1,303,000       7,000   1,040,000    1,310,000    2,350,000
  Marlborough, MA            -          579,000    2,244,000      19,000     579,000    2,263,000    2,842,000
  Franklin, MA               -          599,000    3,256,000           0     599,000    3,256,000    3,855,000
  Franklin, MA               -          706,000    2,523,000           0     706,000    2,523,000    3,229,000
  Franklin, MA               -          932,000    4,160,000           0     932,000    4,160,000    5,092,000
                        ------------ -----------------------  ---------- ----------- ------------ ------------
                         22,183,000  14,293,000   50,145,000     965,000  14,293,000   51,110,000   65,403,000
                        ------------ -----------------------  ---------- ----------- ------------ ------------












                       
                           
                       Accumulated
                       Depreciation
                            and        Date    Depreciable
 Description           amortization  acquired  Life (years)
 -----------           ------------  --------  -----------
<S>                     <C>          <C>       <C>
Office:
  Charlotte, NC         $   404,000    1/85       40
  Naperville, IL          2,030,000    8/86       20
  Greenville, SC          1,080,000   11/86       20
  Greenville, SC            978,000   11/86       20
  Ann Arbor, MI           1,671,000   12/88       40
  Tampa, FL               3,019,000   12/88       25
  Somerset, NJ            3,489,000   12/88       40
  Boston, MA                718,000    6/93       40
  Framingham, MA            516,000    9/93       40
  Boston, MA                 64,000   11/94       40
  Andover, MA               212,000   10/95       40
  Boston, MA                 18,000   11/95       40
  Portland, ME              118,000    7/96       40
  Portland, ME              162,000    7/96       40
                        -----------
                         14,479,000
                        -----------

Office/Research 
  & Development:
  Billerica,  MA            210,000    7/93       40
  Bedford, MA               122,000   11/93       40
  Andover, MA               442,000   11/93       40
  Billerica, MA             271,000   12/93       40
  Billerica, MA             124,000   12/93       40
  Andover, MA               343,000    5/94       40
  Chelmsford, MA            106,000   11/94       40
  Billerica, MA             215,000   11/94       40
  Littleton, MA              61,000    9/95       40
  Chelmsford, MA            108,000   10/95       40
  Tewksbury, MA             137,000    3/96       40
  Andover, MA                30,000    7/96       40
                        -----------
                          2,169,000
                        -----------

Industrial Properties:
  N. Charleston, SC         851,000   12/84       40
  St. Louis, MO             422,000   12/86       40
  St. Louis, MO             350,000    5/87       40
  Bedford, MA               245,000   10/92       40
  St. Louis, MO             204,000   12/92       40
  St. Louis, MO              79,000   12/92       40
  St. Louis, MO             148,000   12/92       40
  St. Louis, MO             163,000   12/92       40
  Wilmington, MA            445,000    5/93       40
  Wilmington, MA            268,000    8/93       40
  Wilmington, MA            114,000   11/94       40
  St. Louis, MO             188,000   11/94       40
  Tewksbury,  MA            400,000    3/95       40
  Northborough, MA           72,000    5/95       40
  Marlborough, MA            46,000    6/95       40
  Marlborough, MA            51,000   12/95       40
  Franklin, MA               75,000   12/95       40
  Franklin, MA               58,000   12/95       40
  Franklin, MA               26,000    8/96       40
                        -----------
                          4,205,000
                        -----------



</TABLE>



(A) These properties collateralize the Trust's $45 million credit facility.


                                      F-13
<PAGE>




                                 MGI PROPERTIES                    Schedule III
                                                                   ------------
                    Real Estate and Accumulated Depreciation        (continued)

                                November 30, 1996

<TABLE>
<CAPTION>

                                                                                Gross amounts at which
                                     Initial Cost                              carried at close of period         
                       -------------------------------------     Costs      -------------------------------   
                                                  Building    capitalized             Building                
                                                     and     subsequent to               and                 
 Description           Encumbrances     Land    Improvements  acquisition   Land    Improvements      Total  
 -----------           ------------     ----    ------------  -----------   ----    ------------      -----  
<S>                    <C>          <C>         <C>          <C>         <C>          <C>         <C>

Retail:
  Hagerstown, MD             -          364,000    1,459,000           0     364,000    1,459,000    1,823,000
  Nashville, TN             (A)       1,570,000    2,655,000     534,000   1,570,000    3,189,000    4,759,000
  Baltimore, MD             (A)       2,000,000    5,710,000      90,000   1,832,000    5,968,000    7,800,000
  Temple Terrace, FL      5,002,000   2,600,000    6,540,000     566,000   2,600,000    7,106,000    9,706,000
  Aurora, IL             12,894,000  12,576,000   15,372,000   1,910,000  12,576,000   17,282,000   29,858,000
  Peabody, MA                -        4,705,000    5,623,000           0   4,705,000    5,623,000   10,328,000
                       ----------- -----------  ----------- ----------- ----------- ------------ ------------ 
                         17,896,000  23,815,000   37,359,000   3,100,000  23,647,000   40,627,000   64,274,000
                        ----------- ----------- ------------ ----------- ----------- ------------ ------------

Apartments:
  Harrison Township, MI     (A)         700,000    1,948,000  10,246,000     700,000   12,194,000   12,894,000
  Tampa, FL               5,154,000   1,850,000    7,009,000     937,000   1,850,000    7,946,000    9,796,000
  Tampa, FL               5,750,000   1,178,000    4,466,000     373,000   1,178,000    4,839,000    6,017,000
  Bloomfield Hills, MI   10,809,000   4,325,000   12,126,000   2,276,000   4,325,000   14,402,000   18,727,000
  Laurel, MD              9,369,000     613,000   12,722,000    (223,000)    613,000   12,499,000   13,112,000
                       ------------ ----------- ------------ ----------- ----------- ------------ ------------
                         31,082,000   8,666,000   38,271,000  13,609,000   8,666,000   51,880,000   60,546,000
                       ------------ ----------- ------------ ----------- ----------- ------------ ------------

Other
   Portland, ME           1,950,000   2,309,000       12,000      -        2,309,000       12,000    2,321,000
   Tampa, FL                 -          427,000       -           -          427,000       -           427,000
   Mount Clemens, MI         -           25,000       -           -           25,000       -            25,000
   Washington, D.C.          -             -          -           -           -            16,000       16,000
                       ------------ ----------- ------------ ----------- ----------- ------------ ------------
                          1,950,000   2,761,000       12,000           0   2,761,000       28,000    2,789,000
                       ------------ ----------- ------------ ----------- ----------- ------------ ------------

                       $110,547,000 $77,297,000 $250,065,000 $28,646,000 $77,169,000 $278,855,000 $356,024,000
                                    =========== ============ =========== =========== ============ ============

Lines of credit          28,000,000

                       ============
                       $138,547,000
                        ===========





                       
                           
                       Accumulated
                       Depreciation
                            and        Date    Depreciable
 Description           amortization  acquired  Life (years)
 -----------           ------------  --------  -----------
<S>                     <C>          <C>       <C>
Retail:
  Hagerstown, MD            436,000   12/84       40
  Nashville, TN           1,078,000    8/86       40
  Baltimore, MD           1,404,000    7/87       40
  Temple Terrace, FL      1,843,000   12/87       40
  Aurora, IL              3,378,000    5/90       40
  Peabody, MA               189,000    8/95       40
                       -----------
                          8,328,000
                        -----------

Apartments:
  Harrison Township, MI   5,476,000   11/74       40
  Tampa, FL               2,244,000   10/86       40
  Tampa, FL               1,074,000    3/88       40
  Bloomfield Hills, MI    4,789,000    1/89       40
  Laurel, MD              2,046,000    9/90       40
                        -----------
                         15,629,000
                        -----------

Other
   Portland, ME            -           7/96
   Tampa, FL               -          12/95
   Mount Clemens, MI       -
   Washington, D.C.        -
                        -----------
                                  0
                        -----------

                        $44,810,000
                        ===========

Lines of credit        

</TABLE>



(A) These properties collateralize the Trust's $45 million credit facility.


                                      F-14

<PAGE>
                                                                    Schedule III

                                 MGI PROPERTIES

                    Real Estate and Accumulated Depreciation

                  Years ended November 30, 1996, 1995 and 1994


A summary of real estate investments and accumulated depreciation and
amortization for the three years ended November 30 follows:

Real Estate Investments
-----------------------
                                         1996           1995            1994

Balance at beginning of year       $293,469,000   $267,530,000    $258,663,000

  Add:
     Investments                     59,950,000     38,302,000      31,786,000
     Building improvements            3,307,000      1,825,000       2,157,000
     Tenant improvements              2,702,000      2,542,000       1,051,000
                                    -----------    -----------     -----------
                                    359,428,000    310,199,000     293,657,000
  Deduct:
     Real estate dispositions         3,404,000     15,385,000      24,312,000
     Other                                -          1,345,000       1,815,000
                                    -----------    -----------     -----------

Balance at end of year             $356,024,000   $293,469,000    $267,530,000
                                    ===========    ===========     ===========

Accumulated Depreciation
 and Amortization

Balance at beginning of year       $ 36,375,000   $ 32,029,000    $ 29,992,000

  Add:
     Depreciation and amortization    8,832,000      7,798,000       7,638,000

  Deduct:
     Real estate dispositions           397,000      1,701,000       3,920,000
     Other                                   -       1,751,000       1,681,000
                                    -----------    -----------     -----------

Balance at end of year             $ 44,810,000   $ 36,375,000    $ 32,029,000
                                    ===========    ===========     ===========

The aggregate cost for Federal income tax purposes of the above investments at
November 30, 1996 is approximately $340 million.

Refer to Note 1 regarding the Trust's accounting policies on real estate
investments and depreciation and amortization.



                                      F-15