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, 1997
                           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 January 29, 1998, the aggregate market value of the voting shares of the
Registrant held by non-affiliates of the Registrant was $339,718,775.

Common Shares Outstanding as of January 29, 1998:   13,721,124

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, 1997.


<PAGE>

                                TABLE OF CONTENTS
                                                                            Page

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


<PAGE>

                                     PART I

Item 1. Business

GENERAL

         MGI Properties(R) (the "Trust" or "MGI") is an unincorporated business
trust organized under the laws of the Commonwealth of Massachusetts. MGI(R)
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, 1997 (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,
1997 of 58 commercial properties and interests in five multi-family residential
properties. Effective July 1997, MGI began internalizing the property management
function with the objective of having its New England properties substantially
under management by the end of fiscal 1998. As of November 30, 1997, 1.8 million
square feet were under MGI property management. 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, 1997, 57%, based upon cost, of MGI's real estate assets
were located in New England. The region contributed approximately 60% of the
Trust property operating income for fiscal 1997 up from 51% in fiscal 1996. At
the end of fiscal 1997, MGI's commercial properties were leased to 321 tenants
and aggregated 5,373,000 square feet (2,048,000 industrial, 1,149,000 office
research and development, 1,369,000 office and 807,000 retail). The multi-family
properties consist of five residential communities aggregating 1,335 units. At
November 30, 1997, the commercial and residential properties were 95.8% and
93.9% 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 thirty-five 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


                                      -1-
<PAGE>


range of real estate investments, including, but not limited to, equity
interests, interests in securities, whether or not secured by mortgages,
interests in rents and 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 toward 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 frequently acquiring quality properties that
have not met their full potential, 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. Management believes that the internalization of the property
management function with respect to its New England properties will improve
service, reduce operating costs and provide a strategic competitive advantage.
With regard to certain properties outside of New England, MGI believes that
using local property management companies currently 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. MGI officers typically work with local property managers to
actively manage these properties. 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.

         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, upon satisfactory terms, 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, the sale of marketable securities, 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 Board of 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, 1997 consisted of investments in
fifty-eight commercial properties and five multi-family residential properties.

         The Trust's real estate investments can be classified by type of
properties and geographic location. As of November 30, 1997, the Trust's real
estate investments were diversified by property type as follows:


<TABLE>
<CAPTION>
                                                                                 % of
                                                                               Portfolio
                                                               % of          Based on 1997
                                                             Portfolio          Property
                    Number of           Square Feet/           Based           Operating                 %
                    Properties             Units              on Cost            Income               Leased
                    ----------             -----              -------            ------               ------
<S>                     <C>               <C>                 <C>                <C>                  <C>  
Industrial              18                2,048,000            19.6%              23.7%                95.4%
Office/R&D              13                1,149,000            14.4%              16.9%               100.0%
Office                  18                1,369,000            32.6%              31.1%                95.9%
Retail                   6                  807,000            16.7%              12.9%                90.4%
Land and Other           3                       --             0.7%               0.9%               100.0%
                        --                ---------           -----               ----                -----

Total Commercial        58                5,373,000            84.0%              85.5%                95.8%
                                          =========                                                   =====

Multi-family             5                    1,335            16.0%              14.5%                93.9%
                        --                    =====           -----              -----                =====
Total Portfolio         63                                    100.0%             100.0%                95.4%
                        ==                                    =====              =====                =====
</TABLE>

         As of November 30, 1997, the Trust's real estate investments were
diversified by geographic region as follows:


<TABLE>
<CAPTION>
                                                                                                 % of
                                                                                               Portfolio
                                                                               % of          Based on 1997
                                        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>  
New England                 44            3,987,000               --            57.2%              59.7%           96.6%
Mid-West                     5              395,000              722            18.4%              19.1%           83.0%
Southeast                   10              637,000              376            13.8%              10.6%           97.1%
Mid-Atlantic                 4              354,000              237            10.6%              10.6%           99.0%
                            --            ---------            -----           -----              -----            ----
Total Portfolio             63            5,373,000            1,335           100.0%             100.0%           95.4%
                            ==            =========            =====           =====              =====            ====
</TABLE>


                                      -4-
<PAGE>


         Lease terms relating to the Trust's properties range from
tenancies-at-will up to eighteen years. The Trust leases commercial space to 321
commercial tenants, including 182 office tenants, 64 retail tenants, 54
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 and 4 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 the Trust 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.

         The Trust has been able to compete effectively despite recessionary
conditions in certain regions from time to time and management believes that
this will continue by reason of the diverse make-up of the Trust's income
producing properties, as well as their modest geographic diversity (as of
November 30, 1997, 57% of the Trust's properties were in New England) and the
diversity of their 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 $113.2 million at
November 30, 1997. 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. The Trustees


                                      -5-
<PAGE>


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, 1997 aggregated approximately $21.3 million at a weighted average
interest rate of approximately 7.2% and represented 18.8% 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, 1997, approximately 57% 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.

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 are in more desirable locations than some of the Trust's
properties. Significant development of office or industrial properties in a
particular area could have an adverse effect, material or otherwise, on the
Trust's ability to lease space in its properties and on the rents charged.


                                      -6-
<PAGE>


         The Trust is 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. In
addition, certain leases provide for early cancellation upon particular
circumstances. 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 its 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 limits the Trust's ability to sell properties held for
less 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.

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. As of January
29, 1998, 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.


                                      -7-
<PAGE>


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 on the Trust 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.

         Some tenants use or generate hazardous substances in the ordinary
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 resulting 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


                                      -8-
<PAGE>


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 Internal Revenue 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 laws 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, 1997.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
                                       Net
                                 Carrying Value             Weighted  Scheduled lease  Number                                       
                                           Per   Percentage  Average    Expirations      of                                Lease
INDUSTRIAL          Sq. Ft.    Dollars    Sq. Ft.  Leased      Rent    1998     1999   Tenants  Principal Tenant         Expiration
------------------------------------------------------------------------------------------------------------------------------------
Distribution and Manufacturing
<S>                 <C>      <C>          <C>       <C>      <C>       <C>      <C>      <C>     <C>                        <C>
Wilmington, MA      294,000  $ 6,662,000  $22.66    100%     $ 4.07     14%      --       3      Avon Dispatch, Inc.        05/31/00
N. Charleston, SC   191,900    2,184,000   11.38    100%       2.35    100%      --       1      Mill Transportation        12/31/97
Northborough, MA    102,300    2,224,000   21.75    100%       3.89     --       --       2      Filene's Basement          09/15/01
Franklin, MA         65,300    3,108,000   47.60     --         --      --       --      --

Flex 
Tewksbury, MA       189,200   10,696,000   56.53    100%       8.45     --       --       1      Avid Technology, Inc.      06/30/10
Nashua, NH          150,300    5,104,000   33.96     81%       4.50     16%      15%      7      Logicraft, Inc.            12/31/00
Wilmington, MA      109,500    4,313,000   39.39    100%       5.40      8%      --       3      United Shoe Machinery      12/31/01
Westford, MA        107,600    3,435,000   31.92    100%       3.50     --      100%      1      Mack Technologies, Inc.    11/30/98
Methuen, MA         106,800    4,774,000   44.70    100%       5.28     --       --       2      Microtouch Systems, Inc.   04/30/03
Wilmington, MA      100,200    2,405,000   24.00    100%       3.94     --       52%      2      Datawatch Corporation      04/30/99
                                                                                                 Thermo Instruments
Franklin, MA        100,000    4,962,000   49.62    100%       5.94     --       --       1      Systems                    01/31/98
Nashua, NH           98,100    3,135,000   31.96    100%       3.97      9%      54%     11      Pure Distributors, Inc.    02/14/00
Bedford, MA          93,200    2,429,000   26.06    100%       6.32     --       19%      3      Imaging Technology, Inc.   07/31/01
                                                                                                 Chromatic Technologies,            
Franklin, MA         83,600    3,699,000   44.24    100%       5.40     --       --       2      Inc.                       06/30/02
Andover, MA          82,500    4,500,000   54.55    100%       5.60      7%       9%      5      LANcity Corporation        04/30/01
Marlborough, MA      75,000    3,087,000   41.16    100%       6.51     25%      --       4      The Concorde Group         09/30/02
Marlborough, MA      59,400    2,272,000   38.24    100%       5.16     59%      --       4      Diebold Incorporated       11/30/02
                                                                                                 Separation
Methuen, MA          38,700    1,734,000   44.81    100%       5.66     50%      --       2      Technologists, Inc.        12/31/01
------------------------------------------------------------------------------------------------------------------------------------
Total             2,047,600  $70,723,000  $34.54     95%     $ 4.92     17%      13%     54
-------------------------------------------------------------- ---------------------------------------------------------------------
                                                   
OFFICE/RESEARCH & DEVELOPMENT                      
------------------------------------------------------------------------------------------------------------------------------------
Tewksbury, MA       140,000  $ 8,631,000  $61.65    100%     $ 9.30     --       --       1      Avid Technology, Inc.      06/30/10
Andover, MA         128,400    6,017,000   46.86    100%       5.00     --      100%      1      Hewlett-Packard Company    07/31/99
Billerica, MA       122,300    4,487,000   36.69    100%       4.67     --       --       1      Precision Robots, Inc.     07/31/01
Chelmsford, MA      108,600    4,431,000   40.79    100%       7.02     --       --       2      Telebit, Inc.              12/31/99
Andover, MA         105,500    6,661,000   63.14    100%      11.60     --      100%      1      ISI Systems, Inc.          04/30/99
Billerica, MA       100,000    4,002,000   40.01    100%       5.09    100%      --       1      Bay Networks, Inc.         12/02/97
Chelmsford, MA       70,900    1,887,000   26.62    100%       5.86     37%      --       4      Schafer Corporation        07/31/98
                                                                                                 Atex Media Solutions,
Bedford, MA          70,600    2,085,000   29.54    100%       3.50     --       --       1      Inc.                       07/31/98
Littleton, MA        66,500    2,263,000   34.02    100%       5.58     62%      --       4      X-Rite, Inc.               12/31/02
Andover, MA          60,600    3,890,000   64.19    100%       6.75     --       --       1      Cabletron Systems, Inc.    05/31/01
Billerica, MA        60,000    1,934,000   32.24    100%       4.75     --       --       1      Bay Networks, Inc.         03/30/00
Westford, MA         59,700    3,458,000   57.93    100%       5.22     48%      --       2      Hewlett-Packard Company    05/14/00
Billerica, MA        56,300    1,907,000   33.87    100%       3.80     --       --       1      Bay Networks, Inc.         12/31/99
------------------------------------------------------------------------------------------------------------------------------------
Total             1,149,400 $51,653,000  $44.94     100%     $ 6.32     17%      20%     21
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      -10-
<PAGE>

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                       Net
                                 Carrying Value             Weighted Scheduled lease  Number                                      
                                           Per   Percentage  Average   Expirations      of                                   Lease
OFFICE              Sq. Ft.    Dollars    Sq. Ft.  Leased     Rent    1998     1999   Tenants Principal Tenant            Expiration
-----------------------------------------------------------------------------------------------------------------------------------
Distribution and Manufacturing
<S>               <C>       <C>           <C>       <C>      <C>       <C>      <C>     <C>    <C>                          <C>
Somerset, NJ        178,600 $ 14,298,000  $ 80.06    98%     $16.71     8%       1%      13    Merrill Lynch                06/30/00
Portland, ME        149,200   16,488,000   110.51    99%      18.93     1%       5%      13    UNUM Life Insurance Co.      01/31/01
Tampa, FL           122,400    8,904,000    72.74    92%      11.55     8%       8%      18    Olsten Kimberly Quality Care 02/28/02
Boston, MA          111,000   10,063,000    90.66    94%      24.95     3%      --       5     Cambridge Associates, Inc.   12/31/02
                                                                                               Northeast Energy
Framingham, MA      108,000    7,022,000    65.02    92%      19.79     2%      10%      26    Services, Inc.               05/31/01
Portland, ME        104,600   11,959,000   114.33    98%      18.78     9%       7%      10    People's Heritage Bank       07/31/04
Andover, MA          97,800    7,594,000    77.65    97%      15.74     --      15%      12    Computer Associates          12/31/02
Ann Arbor, MI        81,700    6,295,000    77.05   100%      12.33     --      13%      2     Comshare                     02/28/05
Farmington, CT       68,100    5,597,000    82.19    93%      15.52     --      --       4     McGraw-Hill Companies, Inc.  07/31/00
Nashua, NH           66,200    4,605,000    69.55    95%      11.58    32%      25%      13    Hesser, Inc.                 08/31/98
Greenville, SC       49,100    1,986,000    40.44   100%      10.22    28%      17%      28    S.C. Tax Commision           06/30/01
Greenville, SC       46,300    1,425,000    30.79   100%      11.16    26%      35%      6     S.C. Voc. Rehab. Dept.       11/30/98
Glastonbury, CT      40,900    3,836,000    93.79   100%      20.38    56%      44%      4     Hewlett-Packard Company      03/31/98
Glastonbury, CT      39,900    3,652,000    91.53   100%      16.94     --       --      4     Equator U.S.A., Inc.         12/31/99
Nashua, NH           36,000    2,269,000    63.03    73%      13.22    34%      23%      8     Conway Quality, Inc.         12/31/97
Boston, MA           27,100    1,610,000    59.42    92%      17.61    27%      --       10    N. E. Realty Resources, Inc. 11/03/03
Nashua, NH           26,000    1,557,000    59.92    97%      13.49    66%       8%      4     Promis Systems Corp.         05/31/98
                                                                                               Novacare Orthotics
Charlotte, NC        16,100      896,000    55.67   100%      14.52    47%      --       2     Prosthetics East             12/31/01
------------------------------------------------------------------------------------------------------------------------------------
Total             1,369,000 $110,056,000  $ 80.39    96%     $16.46    11%      10%     182
------------------------------------------------------------------------------------------------------------------------------------

RETAIL
------------------------------------------------------------------------------------------------------------------------------------
Aurora, IL          313,100  $25,892,000  $ 82.69    78%     $ 8.04    17%       2%      22    Best Buy                    01/31/11
Baltimore, MD       134,800    6,268,000    46.50   100%       6.21     3%       9%      14    Kmart Corp.                 11/30/05
Nashville, TN       111,400    3,551,000    31.88    99%       5.05     --       3%      9     Burlington Coat Factory     01/31/10
Peabody, MA         106,900    9,999,000    93.53   100%      11.75     --       --      1     Bradlees, Inc.              10/31/15
Temple Terrace, FL  100,500    7,694,000    76.56    91%       9.80     5%       4%      17    Publix Super Market, Inc.   11/30/06
Hagerstown, MD       40,200    1,350,000    33.60   100%       5.22     --       --      1     Giant Food Stores, Inc.     12/31/04
------------------------------------------------------------------------------------------------------------------------------------
Total               806,900  $54,754,000  $ 67.86    90%     $ 7.86     8%       3%      64
------------------------------------------------------------------------------------------------------------------------------------
                                 Net Carrying
                                     Value        Percentage
APARTMENT             Units    Dollars   Per unit   Leased
------------------------------------------------------------------------------------------------------------------------------------
Harrison Township, MI  376   $ 8,351,000  $22,209    89%
Bloomfield Hills,
MI                     346    13,426,000   38,804    94%
Tampa, FL              264     7,347,000   27,832    97%
Laurel, MD             237    10,857,000   45,806    97%
Tampa, FL              112     4,845,000   43,258    97%
------------------------------------------------------------------------------------------------------------------------------------
Total                 1,335  $44,826,000  $33,577    94%
------------------------------------------------------------------------------------------------------------------------------------
                          Net Carrying Value
LAND AND OTHER                 Dollars
------------------------------------------------------------------------------------------------------------------------------------
Portland, ME                 $2,321,000
Tampa, FL                       427,000
Mount Clemens, MI                25,000
------------------------------------------------------------------------------------------------------------------------------------
Total                        $2,773,000
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>


                                      -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 under
Item 14 of this report 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 the Trust commenced occupying the space in April 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

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.

                                    Sales Price
                           ----------------------------
Fiscal 1997                   High                Low              Dividends
-----------                   ----                ---              ---------

First Quarter              $22 3/4              $20 1/8              $.27
Second Quarter             $22 3/8              $20 3/8              $.27
Third Quarter              $23 5/8              $20 3/4              $.28
Fourth Quarter             $25 3/8              $22 1/8              $.28


                                    Sales Price
                           ----------------------------
Fiscal 1996                   High                Low              Dividends
-----------                   ----                ---              ---------

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

         On December 18, 1997, the Board of Trustees declared a dividend of $.29
per share payable on January 16, 1998 to shareholders of record on January 8,
1998.

         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.

APPROXIMATE NUMBER OF HOLDERS OF COMMON SHARES.
-----------------------------------------------

                                                         Approximate Number
                                                        of Holders of Record
Title of Class                                        (as of January 29, 1998)
--------------                                        ------------------------

Common Shares, $1.00                                            2,304
   par value


                                      -13-
<PAGE>



Item 6.  Selected Financial Data

<TABLE>
<CAPTION>
===============================================================================================================================
                                                                        Year Ended November 30,
                                        ---------------------------------------------------------------------------------------
                                              1997             1996              1995              1994             1993
-------------------------------------------------------------------------------------------------------------------------------
<S>                                        <C>               <C>              <C>              <C>               <C>         
SUMMARY OF OPERATIONS
Rental income                              $ 62,567,000      $ 54,507,000     $ 44,875,000     $ 43,486,000      $ 36,185,000
Property operating expenses and
     real estate taxes                      (22,827,000)      (20,589,000)     (17,423,000)     (17,392,000)      (14,284,000)
-------------------------------------------------------------------------------------------------------------------------------
Property operating income                    39,740,000        33,918,000       27,452,000       26,094,000        21,901,000

Interest income                                 639,000           421,000          514,000          394,000           713,000
Less expenses:
Depreciation and amortization                10,662,000         9,463,000        8,339,000        8,116,000         7,407,000
Interest                                      9,539,000         9,198,000        5,807,000        5,781,000         5,059,000
General and administrative                    3,206,000         2,873,000        2,651,000        2,580,000         2,191,000
-------------------------------------------------------------------------------------------------------------------------------
Income before net gains                      16,972,000        12,805,000       11,169,000       10,011,000         7,957,000
Net gains and extraordinary item              3,494,000        11,500,000        3,150,000        4,480,000                --
-------------------------------------------------------------------------------------------------------------------------------
Net income                                 $ 20,466,000      $ 24,305,000     $ 14,319,000     $ 14,491,000      $  7,957,000
===============================================================================================================================

Net income per share                              $1.54             $2.11            $1.25            $1.26            $  .75
===============================================================================================================================

Dividends per share                               $1.10             $ .98            $ .90            $ .86            $  .81
===============================================================================================================================

Funds from operations                      $ 27,526,000      $ 22,169,000     $ 19,492,000     $ 18,111,000      $ 15,346,000
===============================================================================================================================

Weighted average shares outstanding          13,289,781        11,540,972       11,487,677       11,450,451        10,574,104
===============================================================================================================================

SUMMARY OF FINANCIAL POSITION
Investments in real estate, at cost        $381,943,000      $356,024,000     $293,469,000     $267,530,000      $258,663,000
-------------------------------------------------------------------------------------------------------------------------------
Total assets                               $362,044,000      $339,664,000     $274,651,000     $255,971,000      $246,700,000
-------------------------------------------------------------------------------------------------------------------------------
Mortgage loans payable                     $113,171,000      $138,547,000     $ 84,506,000     $ 70,954,000      $ 66,949,000
-------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity                 $242,385,000      $194,435,000     $180,540,000     $176,095,000      $171,039,000
===============================================================================================================================
</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 58
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, 1997, 57%, based upon cost, of MGI's real estate assets were
located in New England. The region contributed approximately 60% of the Trust's
property operating income for fiscal 1997 up from 51% in fiscal 1996. This
percentage will likely grow in 1998 as the Trust continues to acquire properties
within New England, and as it periodically sells properties in other regions.

<TABLE>
<CAPTION>
                                       New England                                  Other Regions
---------------------   ------------------------------------------    ------------------------------------------
Property Type            Number      Total Cost       Sq. Feet          Number      Total Cost      Sq. Feet
---------------------   ------------------------------------------    ------------------------------------------
<S>                        <C>        <C>               <C>              <C>        <C>               <C>      
Office                     12         $  79,555,000       875,000         6         $  44,983,000       494,000
Industrial                 17            71,649,000     1,856,000         1             3,075,000       192,000
Office/R&D                 13            54,841,000     1,149,000        --                    --            --
Retail                      1            10,329,000       107,000         5            53,518,000       700,000
Multi-family               --                    --            --         5            61,219,000            --
Land and Other              1             2,321,000            --         2               453,000            --
                        ------------------------------------------    ------------------------------------------

Total                      44         $ 218,695,000     3,987,000        19         $ 163,248,000     1,386,000
                           ==          ============    ==========        ==          ============     =========
</TABLE>

         The multi-family properties consist of five residential communities
aggregating 1,335 units. At November 30, 1997, the commercial and residential
properties were 95.8% and 93.9% leased, respectively.

         During 1997 the Trust acquired 13 properties, which were all located in
New England, totaling 921,000 square feet for an aggregate cost of $48.0
million. In addition, the Trust sold a partnership interest and nine properties:
seven industrial properties located in St. Louis, Missouri, one office building
located in Naperville, Illinois and a small Boston, Massachusetts office
building.

RESULTS OF OPERATIONS

1997 Compared to 1996

         Net income for 1997 was $20.5 million, or $1.54 per share, which
included gains of $3.8 million which was partially offset by an extraordinary
item of $0.3 million incurred in connection with a loan refinancing prepayment
fee. Net income for 1996 of $24.3 million, or $2.11 per share, included net
gains of $11.5 million, which resulted from the sale of three industrial
buildings as well as the sale of a partnership interest. Income before net gains
increased from $12.8 million in 1996 to $17.0 million in 1997.


                                     - 15 -
<PAGE>

         Funds from operations ("FFO") totaled $27.5 million for fiscal 1997,
compared to $22.2 million in 1996. 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. MGI
believes FFO is an appropriate supplemental measure of operating performance.

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


                                                Year Ended November 30,
                                                -----------------------
                                              1997                   1996
                                              ----                   ----
  Net income                               $20,466,000           $ 24,305,000
  Less net gains and extraordinary item     (3,494,000)           (11,500,000)
  Plus building depreciation                 8,385,000              7,337,000
  Plus tenant improvement and
     commission amortization                 2,169,000              2,027,000
                                           -----------            -----------
  Funds from operations                    $27,526,000           $ 22,169,000
                                            ==========            ===========

         The $4.2 million increase in income before net gains from 1996 to 1997
resulted principally from a $5.8 million increase ( $33.9 million versus $39.7
million, respectively) in property operating income (which is defined as rental
income less property operating expenses and real estate taxes), offset by
increases in interest and depreciation and amortization expense. The increase in
interest expense of $0.3 million was due primarily to debt incurred in
connection with the acquisition of properties. Depreciation and amortization
increased by $1.2 million, reflecting the greater number of properties owned.
Additionally, general and administrative costs increased by $0.3 million,
primarily reflecting higher personnel costs. Interest income increased by $0.2
million, reflecting higher average cash balances. The change in 1997 FFO, when
compared to 1996, 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 1996 to 1997 reflects
improved results from comparable properties (which is defined as properties
owned throughout both 1996 and 1997), as well as the effect of the sale and
acquisition of properties, as detailed below:

<TABLE>
<CAPTION>
                                                                                         Net Change in
                                                                                            Property
                        Properties Held         1997 and 1996        1997 and 1996         Operating
Property Type             Both Years             Acquisitions             Sales              Income
-------------             ----------             ------------      -------------------   --------------
<S>                        <C>                     <C>                   <C>                <C>       
Office                     $ 491,000               $2,912,000            $  28,000          $3,431,000
Industrial                    64,000                2,115,000             (647,000)          1,532,000
Office/R&D                   (78,000)                 881,000                   --             803,000
Multi-family                 286,000                       --                   --             286,000
Retail                        34,000                       --                   --              34,000
Land and Other              (122,000)                 218,000             (360,000)           (264,000)
                            ---------              ----------             ---------          ----------

Total                      $ 675,000               $6,126,000            $(979,000)         $5,822,000
                             =======                =========             ========           =========
</TABLE>


                                     - 16 -
<PAGE>


         The increase in property operating income from comparable properties
largely reflects leasing completed during 1997, particularly at properties
located in Massachusetts where leases totaling 469,000 square feet were executed
at substantially higher rents. Base rents on leases signed or renewed in 1997
are expected to generate approximately $1.2 million of additional revenues in
fiscal 1998 as such leases become effective. For the comparable office
properties, rents from leases executed in 1997 are, in aggregate, 27% higher
than rents previously in place. Retail operating results were relatively
unchanged from 1996. Nevertheless, the combination of retail leases executed in
1997 and year to date in fiscal 1998, at the Aurora, Illinois property should
positively impact this segment based upon scheduled expirations. Bradlees, Inc.,
which, pursuant to Chapter 11 of the Federal Bankruptcy Code, affirmed its lease
at the Peabody, Massachusetts store owned by MGI, has obtained an extension to
submit a reorganization plan until August 1998. The multi-family properties
experienced revenue growth of 4%, which reflected higher rental rates offset by
a slight decline in occupancy at two Michigan apartment properties. Property
operating income from the office/r&d and industrial properties combined did not
change significantly from fiscal 1996 but should benefit in fiscal 1998 from
recently executed leases.

         Subsequent to the end of fiscal 1997, the Trust completed the sale of a
102,000 square-foot industrial property located in Northborough, Massachusetts
and realized a gain of $1.3 million. In addition, the Trust has executed
contracts for the sale of two Florida apartment complexes, a South Carolina
industrial property and a Nashville, Tennessee retail property, although the
sales are subject to the satisfactory completion of certain terms and
conditions, including due diligence by the potential purchasers. With the
completion of the pending sale of the South Carolina industrial property, all of
the Trust's office/r&d and industrial properties will be located in New England.

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

                        1997           Leased at         Scheduled Expirations
Property Type          Leasing     November 30, 1997       1998        1999
-------------          -------     -----------------     --------    --------
Industrial             490,200           95.4%           355,500      260,300
Office/R&D             173,500          100.0%           196,000      233,900
Office                 282,300           95.9%           156,400      131,600
Retail                  58,500           90.4%            61,800       25,400
                       -------         -------           --------     --------
Total                1,004,500           95.8%           769,700      651,200
                     =========         =======           =======      =======

         The 1997 leasing includes 340,000 square feet for properties that were
sold during 1997. With regard to the leasing for properties owned at the end of
the year, lease renewals totaled 299,000 square feet, leases signed with new
tenants totaled 308,000 square feet and leases related to space that was vacant
as of December 1, 1996 totaled 57,000 square feet. Scheduled expirations in 1998
represent 14.3% of the Trust's total commercial square feet at November 30,
1997, compared to scheduled expirations in 1997 of 478,400 square feet, which
represented 11.7% of the Trust's total commercial square feet at November 30,
1996. The fiscal 1998 expirations are scheduled as follows: 418,000 square feet
in the first quarter, 57,000 square feet in the second quarter, 152,000 square
feet in the third quarter and 143,000 square feet in the fourth quarter. In the
Trust's Massachusetts portfolio, leases relating to 339,200 and 444,500 square
feet are scheduled to expire in 1998 and 1999, respectively, which management
believes are subject to rents that are generally below the current market.




                                     - 17 -
<PAGE>

         Subsequent to 1997, the Trust executed leases for 45,000 square feet of
vacant space and for 50,000 square feet scheduled to expire in 1998 at Yorkshire
Plaza in Aurora, Illinois. Regarding an office/r&d building located in
Billerica, Massachusetts, MGI elected to enter into an early termination of a
lease which was expiring in 1998, and signed a new lease for 100,000 square
feet. The space was vacated early in December and, following completion of
tenant improvements, the new tenant is expected to begin occupancy at the start
of the second quarter of 1998 at a materially increased rental rate. In
addition, a lease was executed for a 65,300 square-foot industrial building,
located in Franklin, Massachusetts, that was vacant at November 30, 1997.

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, 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.

         FFO in 1996 totaled $22.2 million compared to $19.5 million in 1995.
The following is a reconciliation of net income to FFO:

                                              Year Ended November 30,
                                              -----------------------
                                             1996                      1995
                                             ----                      ----
         Net income                      $ 24,305,000              $14,319,000
         Less net gains                   (11,500,000)              (3,150,000)
         Plus building depreciation         7,337,000                6,840,000
         Plus tenant improvement and
            commission amortization         2,027,000                1,483,000
                                          -----------              -----------
         Funds from operations           $ 22,169,000              $19,492,000
                                         ============              ===========

         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.



                                     - 18 -
<PAGE>


         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 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:

                                                 Non-
                     New England              New England
Property Type         Properties               Properties          Net Change
-------------         ----------                ----------          ----------
Industrial            $2,478,000             $  (174,000)        $  2,304,000
Office/R&D             1,767,000                      --            1,767,000
Office                 1,820,000                 675,000            2,495,000
Multi-family                  --              (1,055,000)          (1,055,000)
Retail                 1,048,000                  26,000            1,074,000
Land and Other           149,000                (268,000)            (119,000)
                        --------              -----------           ---------
Total                 $7,262,000             $  (796,000)        $  6,466,000
                       =========                 =======            =========

         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, Portland,
Maine acquisition, which contributed $1.4 million to the net change. The
increase in the retail segment was largely due to the contribution of the
Bradlees, Inc. 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 of New England was a decrease from an
overall 100% leased rate at November 30, 1995 to an overall 98% leased rate at
November 30, 1996. Higher revenues from the non-New England office buildings
contributed to the increase in office property operating income. The decrease in
operating income from 1995 to 1996 in the multi-family 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.


                                     - 19 -
<PAGE>

LIQUIDITY

         Shareholders' equity at November 30, 1997 was $242.4 million, compared
to $194.4 million at November 30, 1996. The increase primarily reflects the net
proceeds of $41.6 million from an equity offering of 2,000,000 common shares and
other shares issued as well as the excess of net income over distributions paid.
At November 30, 1997, financial liquidity was provided by $14.0 million in cash
and cash equivalents and by $29.5 million available under lines of credit
aggregating $45.0 million. The principal sources and uses of cash in 1997 are
summarized as follows:


         Sources of Cash
         ---------------
         Trust operations                                 $  29,100,000
         Sales of real estate, net                           15,600,000
         Proceeds from the issuance of common shares         41,600,000
         New borrowings, net of fees                         26,500,000
                                                             ----------
         Total                                             $112,800,000
                                                            ===========
         Uses of Cash
         ------------
         Real estate acquisitions                         $  48,000,000
         Dividends                                           14,400,000
         Additions to real estate                             5,800,000
         Repayment of mortgage loans payable                 43,200,000
         Other                                                2,600,000
                                                           ------------
         Total                                             $114,000,000
                                                            ===========

         During 1997 the Trust acquired 13 properties totaling 921,000 square
feet for an aggregate cost of $48.0 million. In addition, the Trust sold a
partnership interest and nine properties that had an aggregate net book value of
$24.0 million. A summary of the 1997 real estate acquisitions is as follows:

<TABLE>
<CAPTION>
                                                                                    Square
Property Type                     Location                  Date Acquired            Feet                Cost
-------------                     --------                  -------------            ----                ----
<S>                    <C>                                      <C>                  <C>           <C>          
Industrial             Methuen, Massachusetts                   12/96                106,800       $   4,855,000
                       Methuen, Massachusetts                   12/96                 38,700           1,762,000
                       Westford, Massachusetts                   3/97                107,600           3,481,000
                       Andover, Massachusetts                    5/97                 82,500           4,543,000
                       Nashua, New Hampshire                     9/97                150,300           5,119,000
                       Nashua, New Hampshire                     9/97                 98,100           3,145,000
Office / R&D           Westford, Massachusetts                   4/97                 59,700           3,494,000
Office                 Glastonbury, Connecticut                  4/97                 40,900           3,884,000
                       Glastonbury, Connecticut                  4/97                 39,900           3,670,000
                       Nashua, New Hampshire                     9/97                 66,200           4,620,000
                       Nashua, New Hampshire                     9/97                 36,000           2,267,000
                       Nashua, New Hampshire                     9/97                 26,100           1,563,000
                       Farmington, Connecticut                  11/97                 68,100           5,597,000
                                                                                     -------         -----------
Total                                                                                920,900         $48,000,000
                                                                                     =======         ===========
</TABLE>




                                     - 20 -
<PAGE>



         Mortgage loans payable totaled $113.2 million at November 30, 1997, a
net decrease of $25.4 million, compared to $138.5 million at November 30, 1996.
The Trust utilized $28.0 million of the offering proceeds to repay the
outstanding balances on its lines of credit and subsequently, increased the line
by $15.5 million in connection with property acquisitions. In connection with
the St Louis property sales, an $8.7 million mortgage loan was assigned to the
purchaser. In addition, the Trust refinanced a $12.3 million, 9.3% mortgage loan
with an $11.0 million loan bearing interest at a rate of 8.12%. The balance of
the change represents scheduled principal payments. Scheduled loan principal
payments due within twelve months of November 30, 1997 total $18.4 million,
which includes $15.5 million of the Trust's lines of credit. MGI believes it
will continue to be able to extend or refinance maturing mortgage loans upon
satisfactory terms. Subsequent to November 30, 1997, the Trust closed on a
ten-year, $11.6 million fixed rate non-recourse loan bearing interest at a rate
of 7.12% and also signed a commitment letter for a $75.0 million unsecured
revolving credit facility.

         Cash requirements in 1998 will include distributions to shareholders,
capital and tenant improvements and leasing expenditures. During 1997,
expenditures for capital and tenant improvements totaled $3.1 million and $2.7
million, respectively. Included in the amount for capital improvements were $1.4
million of costs associated with building renovations. During 1998, budgeted
capital expenditures are anticipated to aggregate $2.6 million. Tenant
improvements relating to anticipated leasing activity are budgeted at $3.9
million in 1998, of which $1.6 million relates to recently executed leases.

         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 1998 will be primarily financed by debt and, to a lesser extent,
by cash flow from operations, short-term 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.


                                     - 21 -
<PAGE>

Forward-Looking Statements

         The Trust's Annual Report on Form 10-K for the year ended November 30,
1997 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 this report. 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 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.

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, 1997 and 1996
         Consolidated Statements of Earnings, Years ended November 30, 1997,
           1996 and 1995
         Consolidated Statements of Cash Flows, Years ended November 30, 1997,
           1996 and 1995
         Consolidated Statements of Changes in Shareholders' Equity, Years ended
           November 30, 1997, 1996 and 1995
         Notes to Consolidated Financial Statements

             2.  CONSOLIDATED FINANCIAL STATEMENT SCHEDULE

Financial Statement Schedule (as of or for the year ended November 30, 1997):
         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, 1997
                     (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)     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.

 (k)     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.



                                     - 25 -
<PAGE>

 (l)     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.

 (m)     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.

 (n)     By-Law, adopted on December 24, 1982 incorporated by reference to the
         Trust's Report on Form 8-K, filed on January 12, 1983.

 (o)     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.

 (p)     By-Law adopted December 18, 1997, relating to shareholder proposals
         and nominations.*

 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.



                                     - 26 -
<PAGE>

 (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.

 (g)     MGI Properties 1994 Stock Option and Stock Appreciation Rights Plan 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.

 (i)     MGI Properties 1997 Employee Stock Option, Stock Appreciation Rights
         and Restricted Stock Plan, incorporated by reference to the Trust's
         Definitive Proxy Statement, dated February 24, 1997

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

 24      Auditors' consent.

         (b)      REPORTS ON FORM 8-K:

                  None

         *Filed herewith

         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:  January 30, 1998           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.

       Signature                          Title                     Date
       ---------                          -----                     ----

 /s/ W. Pearce Coues           Chairman of the Board 
---------------------------    of Trustees and Chief 
 W. Pearce Coues               Executive Officer                January 30, 1998
                              
                              
/s/ Phillip C. Vitali          Principal Financial Officer      January 30, 1998
---------------------------                                                     
Phillip C. Vitali                                                               
                                                                                
                                                                                
/s/ David P. Morency           Principal Accounting Officer     January 30, 1998
---------------------------                                                     
David P. Morency                                                                
                                                                                
                                                                                
/s/ George S. Bissell                    Trustee                January 30, 1998
---------------------------                                                     
George S. Bissell                                                               
                                                                                
                                                                                
/s/ Herbert D. Conant                    Trustee                January 30, 1998
---------------------------                                                     
Herbert D. Conant                                                               
                                                                                
                                                                                
/s/ Francis P. Gunning                   Trustee                January 30, 1998
---------------------------                                                     
Francis P. Gunning                                                              
                                                                                
                                                                                
/s/ George M. Lovejoy, Jr.               Trustee                January 30, 1998
---------------------------                                                     
George M. Lovejoy, Jr.                                                          
                                                                                
                                                                                
/s/ William F. Murdoch, Jr.              Trustee                January 30, 1998
---------------------------                                                     
William F. Murdoch, Jr.                                                         
                                                                                
                                                                                
/s/ Rodger P. Nordblom                   Trustee                January 30, 1998
---------------------------    
Rodger P. Nordblom             



                                      -28-






<PAGE>



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

                                    FORM 10-K

                   ITEM 8 - CONSOLIDATED FINANCIAL STATEMENTS
                                November 30, 1997

                                 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, 1997 and 1996                                                     F - 2
     Consolidated Statements of Earnings,
        Years ended November 30, 1997, 1996 and 1995                                   F - 3
     Consolidated Statements of Cash Flows,
        Years ended November 30, 1997, 1996 and 1995                                   F - 4
     Consolidated Statements of Changes in Shareholders' Equity,
        Years ended November 30, 1997, 1996 and 1995                                   F - 5
     Notes to Consolidated Financial Statements                                   F - 6-- F - 13


Financial Statement Schedule (as of or for the year ended November 30, 1997):
     Schedule III - Real Estate and Accumulated Depreciation                      F - 14--F - 16

Exhibit XI - Computation of Net Income Per Share, Assuming Full Dilution              F - 17
</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, 1997 and 1996, and the results of their
operations and their cash flows for each of the years in the three-year period
ended November 30, 1997 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.




                                                           KPMG Peat Marwick LLP




Boston, Massachusetts
December 18, 1997



                                     F - 1
<PAGE>


                                 MGI PROPERTIES

                           Consolidated Balance Sheets

                           November 30, 1997 and 1996


<TABLE>
<CAPTION>
                        Assets                                                     1997                     1996
<S>                                                                       <C>                     <C>                
Real estate (notes 2, 3 and 4):
     Land                                                                 $        82,989,000     $        77,169,000
     Buildings and improvements                                                   288,095,000             267,391,000
     Tenant improvements                                                           10,859,000              11,464,000
                                                                             ----------------        ----------------
               Total real estate, at cost                                         381,943,000             356,024,000

     Accumulated depreciation and amortization                                    (47,158,000)            (44,810,000)
                                                                             ----------------        ----------------
               Net investments in real estate                                     334,785,000             311,214,000

Cash and cash equivalents (note 4)                                                 13,964,000              15,140,000
Accounts receivable                                                                 3,654,000               3,665,000
Other assets                                                                        9,641,000               9,645,000
                                                                             ----------------            ------------

                                                                          $       362,044,000     $       339,664,000
                                                                             ================        ================

     Liabilities and Shareholders' Equity

Liabilities:
     Mortgage loans payable (note 4)                                      $       113,171,000     $       138,547,000
     Other liabilities                                                              6,488,000               6,682,000
                                                                             ----------------        ----------------
               Total liabilities                                                  119,659,000             145,229,000

Shareholders' equity (notes 5, 6 and 7):
     Common shares - $1 par value:  17,500,000 shares
        authorized; 13,625,489 issued (11,563,199 at
        November 30, 1996)                                                         13,625,000              11,563,000
     Additional paid-in capital                                                   207,031,000             167,185,000
     Undistributed net income                                                      21,729,000              15,687,000
                                                                             ----------------        ----------------

               Total shareholders' equity                                         242,385,000             194,435,000
                                                                             ----------------        ----------------

                                                                          $       362,044,000     $       339,664,000
                                                                             ================        ================
</TABLE>


See accompanying notes to consolidated financial statements.



                                     F - 2
<PAGE>


                                 MGI PROPERTIES

                       Consolidated Statements of Earnings


<TABLE>
<CAPTION>
                                                                              Year ended November 30,
                                                                   1997                1996                 1995
<S>                                                       <C>                 <C>                  <C>               
Income:
     Rental                                               $      62,567,000   $       54,507,000   $       44,875,000
     Interest                                                       639,000              421,000              514,000
                                                             --------------       --------------      ---------------

               Total income                                      63,206,000           54,928,000           45,389,000
                                                             --------------       --------------      ---------------

Expenses:
     Property operating expenses                                 15,384,000           14,099,000           11,823,000
     Real estate taxes                                            7,443,000            6,490,000            5,600,000
     Depreciation and amortization                               10,662,000            9,463,000            8,339,000
     Interest                                                     9,539,000            9,198,000            5,807,000
     General and administrative                                   3,206,000            2,873,000            2,651,000
                                                             --------------       --------------      ---------------

               Total expenses                                    46,234,000           42,123,000           34,220,000
                                                             --------------       --------------      ---------------

               Income before net gains                           16,972,000           12,805,000           11,169,000

Net gains                                                         3,800,000           11,500,000            3,150,000
                                                             --------------       --------------      ---------------

               Income before extraordinary item                  20,772,000           24,305,000           14,319,000

Extraordinary item - prepayment of debt                            (306,000)                  -                    -
                                                             --------------       --------------      --------------

               Net income                                 $      20,466,000   $       24,305,000   $       14,319,000
                                                             ==============       ==============      ===============

PER SHARE DATA

     Income per share before extraordinary item                   $    1.56            $    2.11             $   1.25
                                                                      =====                 ====                =====

     Net income per share                                         $    1.54            $    2.11             $   1.25
                                                                      =====               ======                =====

     Weighted average shares outstanding                         13,289,781           11,540,972           11,487,677
                                                             ==============       ==============      ===============
</TABLE>


See accompanying notes to consolidated financial statements.


                                     F - 3
<PAGE>

                                 MGI PROPERTIES

                      Consolidated Statements of Cash Flows


<TABLE>
<CAPTION>
                                                                                Year ended November 30,
                                                                     1997                1996                    1995
<S>                                                             <C>                   <C>                   <C>         
Cash flows from operating activities:
     Net income                                                 $ 20,466,000          $ 24,305,000          $ 14,319,000
     Adjustments to reconcile net income to
        net cash provided by operating activities:
           Depreciation and amortization                          10,662,000             9,463,000             8,339,000
           Net gains                                              (3,800,000)          (11,500,000)           (3,150,000)
           Extraordinary item                                        306,000                    -                     -
           Other                                                   1,456,000            (1,231,000)             (202,000)
                                                                 ------------          -------------         -----------
                  Net cash provided by operating
                      activities                                  29,090,000            21,037,000            19,306,000
                                                                 ------------          -------------         -----------

Cash flows from investing activities:
     Acquisitions of real estate                                 (48,000,000)          (38,667,000)          (38,302,000)
     Additions to real estate                                     (3,114,000)           (3,234,000)           (1,825,000)
     Tenant improvements                                          (2,669,000)           (2,702,000)           (2,542,000)
     Deferred tenant charges                                      (2,085,000)           (1,348,000)           (1,634,000)
     Net proceeds from sales of real estate interests             15,562,000            11,103,000            16,902,000
     Other                                                          (112,000)               35,000              (289,000)
                                                                 ------------          -------------         -----------
                  Net cash used in investing
                      activities                                 (40,418,000)          (34,813,000)          (27,690,000)
                                                                 ------------          -------------         -----------

Cash flows from financing activities:
     Proceeds from sale of common shares                          41,566,000               678,000               322,000
     Repayment of mortgage loans payable                         (43,184,000)           (2,242,000)          (25,473,000)
     Additions to mortgage loans payable                          26,500,000            34,743,000            38,025,000
     Mortgage prepayment penalty                                    (306,000)                   -                     -
     Cash distributions                                          (14,424,000)          (11,308,000)          (10,337,000)
                                                                 ------------          -------------         -----------
                  Net cash provided by financing
                      activities                                  10,152,000            21,871,000             2,537,000
                                                                 ------------          -------------         -----------

                  Net increase (decrease) in cash and
                      cash equivalents                            (1,176,000)            8,095,000            (5,847,000)

Cash and cash equivalents:
     Beginning of year                                            15,140,000             7,045,000            12,892,000
                                                                 ------------          -------------         -----------

     End of year                                                $ 13,964,000          $ 15,140,000          $  7,045,000
                                                                 ============          =============         ===========
</TABLE>


See accompanying notes to consolidated financial statements.



                                     F - 4
<PAGE>



                                 MGI PROPERTIES

           Consolidated Statements of Changes in Shareholders' Equity


<TABLE>
<CAPTION>
                                                                                   Additional
                                                              Common                 paid-in             Undistributed
                                                              shares                 capital              net income
<S>                                                   <C>                   <C>                     <C>                 
Balance at November 30, 1994                          $       11,466,000    $        165,921,000    $        (1,292,000)

     Net income                                                       -                       -              14,319,000
     Distributions (note 7)                                           -                       -             (10,337,000)
     Dividend reinvestment and
        share purchase plan (note 5)                              19,000                 250,000                     -
     Options exercised and other (note 6)                         17,000                 177,000                     -
                                                          --------------        ----------------        --------------

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

     Net income                                                       -                       -              24,305,000
     Distributions (note 7)                                           -                       -             (11,308,000)
      Dividend reinvestment and
        share purchase plan (note 5)                              23,000                 357,000                     -
     Options exercised and other (note 6)                         38,000                 480,000                     -
                                                          --------------        ----------------        --------------

Balance at November 30, 1996                                  11,563,000             167,185,000             15,687,000

     Net income                                                       -                       -              20,466,000
     Distributions (note 7)                                           -                       -             (14,424,000)
     Sale of common shares (note 5)                            2,000,000              39,075,000                     -
     Dividend reinvestment and
        share purchase plan (note 5)                              18,000                 365,000                     -
     Options exercised and other (note 6)                         44,000                 406,000                     -
                                                          --------------        ----------------        --------------

Balance at November 30, 1997                          $       13,625,000    $        207,031,000    $        21,729,000
                                                          ==============        ================        ===============
</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) Real Estate
       Generally, real estate assets are stated at cost less depreciation. Real
           estate investments, excluding land costs, are depreciated using the
           straight-line method over their estimated useful lives. Tenant
           improvements are amortized over the shorter of their estimated useful
           lives or lease terms. Maintenance and repairs are charged to expense
           as incurred; major improvements are capitalized. Real estate assets
           held for sale are carried at the lower of depreciated cost or fair
           value less cost to sell and are not depreciated while they are held
           for sale.

       In 1997, the Trust adopted Statement of Financial Accounting Standards
           ("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets
           and for Long-Lived Assets to be Disposed of. This Statement requires
           that long-lived assets to be held and used by an entity be reviewed
           for impairment whenever events or changes in circumstances indicate
           that the carrying amount of an asset may not be recoverable. The
           Statement requires the use of undiscounted estimated cash flows
           expected from the asset's operations and eventual disposition. If the
           sum of the expected future cash flows is less than the carrying value
           of the asset, an impairment loss is recognized based on the fair
           value of the asset. Adoption of this pronouncement had no effect on
           the consolidated statement of earnings for the year ended November
           30, 1997.

       (d) Revenues
       Rental income from leases with scheduled rent increases is recognized
           using the straight-line method over the life of the lease.

                                                                     (Continued)



                                     F - 6
<PAGE>


                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


       (e) Deferred Financing and Leasing Costs
       Included in other assets are costs incurred in connection with financing
           or leasing which are capitalized and amortized using the
           straight-line method over the terms of the related loan or lease.
           Amortization of deferred financing costs is included in interest
           expense in the consolidated statements of earnings. Unamortized
           deferred costs are charged to expense upon the early termination of
           the lease or upon the early prepayment of the financing.

       (f) 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 1997, the Trust sold seven industrial properties for $14.9 million
           in a single transaction. The properties were secured by a $8.7
           million loan payable which was assigned to the purchaser at closing.
           During 1996, the Trust acquired three properties that were subject to
           an aggregate of $21.3 million of existing debt. Only the cash portion
           of these transactions is reflected in the accompanying consolidated
           statements of cash flows.

       Cash interest payments of $8.7 million, $8.6 million and $6.0 million
           were made for the years ended November 30, 1997, 1996 and 1995,
           respectively. During 1995, the Trust capitalized interest of $.4
           million.

       (g) Fair Value of Financial Instruments
       The Trust estimated the fair values of its financial instruments at
           November 30, 1997 using discounted cash flow analysis and quoted
           market prices. Such financial instruments include short-term
           investments, U.S. Government securities, mortgage loans payable and a
           mortgage note receivable which was received in connection with a
           transaction not qualifying as a sale 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.

       (h) 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.

       (i) 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.

                                                                     (Continued)


                                     F - 7
<PAGE>



                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


       (j) Reclassifications
       Certain prior year amounts have been reclassified to conform with the
           current year presentation.

(2)    Real Estate Assets

       At November 30, 1997, the Trust's real estate investment portfolio
           consisted of the following (based on cost): office - 33%;
           office/research and development - 14%; industrial - 20%; retail -
           17%; and multi-family - 16%.

       In addition, at November 30, 1997, 57% of the Trust's real estate
           investments based on cost were located in New England, with 18% in
           the Mid-West, 14% in the Southeast and 11% in Mid-Atlantic states.

       At November 30, 1997, the Trust had entered into signed agreements for
           the sale of five properties having a net carrying value of $20.2
           million. Although the sales were subject to the satisfactory
           completion of certain terms and conditions, including due diligence
           by the potential purchasers, the Trust had deemed these five
           properties held for sale at November 30, 1997 and had ceased
           depreciating these properties. On December 2, 1997, the Trust
           completed the sale of one of the properties deemed held for sale, a
           102,000 square foot industrial building with a net carrying value of
           $2.2 million, and realized a gain of $1.3 million. In light of the
           uncertainties inherent in real estate transactions, there can be no
           assurance that the sale of the remaining four properties deemed held
           for sale will be successfully completed.

(3)    Leases

       All leases relating to real estate investments are operating leases;
           accordingly, rental income is reported when earned. Operating leases
           on apartments generally have a term of one year or less.

       Future minimum lease payments on noncancelable operating leases at
           commercial properties at November 30, 1997 are: $42.8 million in
           1998, $38.1 million in 1999, $30.9 million in 2000, $23.5 million in
           2001, $18.6 million in 2002; and $98.9 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 $8.1 million in 1997, $7.4
           million in 1996 and $5.9 million in 1995.

                                                                     (Continued)



                                     F - 8
<PAGE>


                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


       One of the Trust's real estate investments, a 107,000 square foot retail
           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 and is current with its rent through November 30, 1997.

(4)    Mortgage Loans Payable

       Mortgage loans payable at November 30 follow:
<TABLE>
<CAPTION>
                                                                                     1997                  1996
<S>                                                                         <C>                   <C>                
      Mortgage loans, maturing 2000 through 2014, at effective
         interest rates ranging from 7.5% to 8.9%                           $        91,921,000   $       104,797,000

      Housing revenue bond, maturing 2007, at 5.9% and
         5.5% at November 30, 1997 and 1996, respectively                             5,750,000             5,750,000

      Amounts outstanding under lines of credit, at an effective interest rate
         of 7.7% and 7.6% at November 30, 1997
         and 1996, respectively                                                      15,500,000            28,000,000
                                                                                ---------------      ----------------

                                                                            $       113,171,000   $       138,547,000
                                                                                ===============      ================

      Weighted average interest rate                                                   7.89%                 7.95%
                                                                                       ====                  ====
</TABLE>

       The mortgage loans payable are nonrecourse and are collateralized by
           certain real estate investments having a net carrying value of $142.2
           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 $2.4 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 is
           fixed for a one-year term ending October 31, 1998 and was 3.85% at
           November 30, 1997 (an effective interest rate of 5.9% 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 $54.3 million and are subject to a variable interest rate. A
           fee, which does not exceed .25% per annum, is charged on the unused
           amounts.

                                                                     (Continued)


                                     F - 9
<PAGE>


                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


       Principal payments on mortgage loans payable, inclusive of the lines of
           credit, due in the next five years and thereafter are as follows:
           $18.4 million in 1998, $3.2 million in 1999, $14.9 million in 2000,
           $3.3 million in 2001, $3.5 million in 2002, and $69.9 million
           thereafter.

       As of November 30, 1997, the Trust had entered into an agreement for an
           $11.6 million fixed rate non-recourse loan secured by one of its
           investments bearing interest at a rate of 7.12% and having a term of
           10 years. This loan closed in the first quarter of fiscal 1998.
           Subsequent to the close of fiscal 1997, the Trust signed a commitment
           letter for a $75 million unsecured line of credit that is expected to
           close in the second quarter of 1998.

(5)    Shareholders' Equity

       (a) 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 from time to time. In January 1997, the Trust
           completed a public offering of 2,000,000 common shares at a price of
           $22 per share.

       (b) 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, 1997, 1996 and 1995, the Trust
           issued 18,217, 22,808 and 18,828, respectively, common shares through
           its Dividend Reinvestment and Share Purchase Plan.

       (c) Preferred Shares
       At November 30, 1997 and 1996, the Trust had authorized six million of
           preferred shares, $1 par value, of which none were issued.




                                                                     (Continued)

                                     F - 10
<PAGE>


                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


       (d) 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.

(6)    Stock Option Plans

       Under the Trust's 1997, 1994 and 1988 stock option plans for key
           employees and Trustees (the "Plans"), incentive stock options or
           nonqualified options and related stock appreciation rights and
           restricted stock awards 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:

<TABLE>
<CAPTION>
                                                        1997                        1996                          1995
                                             -----------------------  -------------------------------  ------------------------
                                                          Weighted                      Weighted                     Weighted
                                                          Average                       Average                       Average
                                                          Exercise                      Exercise                     Exercise
                                               Shares      Price            Shares       Price            Shares       Price
                                               -------     -----            ------       -----            -------      -----
<S>                                           <C>          <C>              <C>          <C>              <C>         <C>   
Outstanding, beginning of year                810,411      $13.68           669,411      $13.02           549,632     $12.62
Granted                                       240,000      $21.42           161,500      $16.24           132,000     $14.36
Exercised                                     (51,792)     $12.31           (14,500)     $11.86           (7,221)     $ 7.88
Expired or forfeited                           (1,000)     $21.00            (6,000)     $12.63           (5,000)     $12.63
                                              -------                       -------                        -------
Outstanding, end of year                      997,619      $15.59           810,411      $13.68           669,411     $13.02
                                              =======                       =======                       =======
Options exercisable, end of year              893,619      $14.91           739,661      $13.42           613,411     $12.86
                                              =======                       =======                       =======
Weighted average fair value of options
granted during the year                         $3.44                         $2.28                         $2.21
                                                =====                         =====                         =====
</TABLE>


                                                                     (Continued)




                                     F - 11
<PAGE>

                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


       The following table summarizes information about stock options
           outstanding at November 30, 1997:

<TABLE>
<CAPTION>
                                             Options Outstanding                                   Options Exercisable
                          ----------------------------------------------------------     ----------------------------------------
                                                 Weighted
                                                 Average                                                         Weighted
        Range of              Number            Remaining         Weighted Average            Number              Average
    Exercise Prices         Outstanding      Contractual Life      Exercise Price          Exercisable        Exercise Price
   -----------------        -----------      ----------------      --------------         -------------     ----------------
<S>                           <C>               <C>                   <C>                  <C>                   <C>   
$7.375 to $11.125              66,500           3.6 years             $ 9.65                66,500               $ 9.65
$12.625 to $16.75             692,119           5.1 years             $14.14               692,119               $14.14
$21 to $24.75                 239,000           9.2 years             $21.42               135,000               $21.42
                              -------                                                      -------
$7.375 to $24.75              997,619           6.0 years             $15.59               893,619               $14.91
                              =======                                                      =======
</TABLE>

       Subsequent to November 30, 1997, 218,000 options were granted, of which
           half are immediately exercisable and half are exercisable in fiscal
           1999.

       During 1997, the Trust adopted SFAS No. 123, Accounting for Stock-Based
           Compensation. This statement provides entities a choice between fair
           value-based or intrinsic value-based methods of accounting for
           stock-based compensation plans. The Trust has elected to continue
           using the intrinsic value method. Accordingly, no compensation cost
           has been recognized. Had compensation cost for the plan been
           determined based on the fair value at the grant dates for awards
           under the plan consistent with the method prescribed by SFAS No. 123,
           the Trust's net income and net income per share would have been
           reduced to the pro forma amounts indicated as follows:

           Year ended November 30:        1997                 1996
           Net income:
                As reported         $  20,466,000      $    24,305,000
                Pro forma           $  19,842,000      $    23,969,000

           Net income per share:
                As reported         $        1.54      $          2.11
                Pro forma           $        1.49      $          2.08

       For purposes of this pro forma disclosure, the fair value of each option
           grant is estimated on the date of grant using the Black-Scholes
           option-pricing model with the following weighted average assumptions
           used for grants: dividend yield of 6.2% for 1997 and 6.9% for 1996;
           expected volatility of 24.8% for 1997 and 26.1% for 1996; expected
           lives of seven years for both years; and risk-free interest rates of
           6.38% for 1997 and 6.78% for 1996.

                                                                     (Continued)




                                     F - 12
<PAGE>


                                 MGI PROPERTIES

                   Notes to Consolidated Financial Statements


(7)    Cash Distributions

       The Trust made cash distributions of $14.4 million in 1997, $11.3 million
           in 1996 and $10.3 million in 1995, 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

           1997           $1.06                $0.04              $1.10
           1996           $0.56                $0.42              $0.98
           1995           $0.69                $0.21              $0.90

       On December 18, 1997, the Trust declared a dividend of $.29 per share
           payable on January 16, 1998 to shareholders of record on January 8,
           1998.

(8)    Quarterly Financial Information (Unaudited)

       Quarterly results of operations for the years ended November 30, 1997 and
           1996 follow:

<TABLE>
<CAPTION>
                                                                          Quarter Ended
                 1997                       February 28            May 31              August 31          November 30
<S>                                    <C>                  <C>                   <C>                 <C>               
       Total income                    $      15,088,000    $      15,574,000     $      16,145,000   $       16,399,000
       Total expenses                         11,433,000           11,310,000            11,601,000           11,890,000
                                          --------------       --------------        --------------       --------------
       Income before net gains
           and extraordinary item              3,655,000            4,264,000             4,544,000            4,509,000
       Net gains and extra-
           ordinary item                         294,000                  --                    --             3,200,000
                                          --------------       --------------        --------------       --------------
       Net income                      $       3,949,000    $       4,264,000     $       4,544,000   $        7,709,000
                                          ==============       ==============        ==============       ==============

       Net income per share                       $  .32              $   .31              $    .33             $    .57
                                                     ===                  ===                   ===                  ===

<CAPTION>
                                                                          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
                                                     ===                 ====                   ===                  ===
</TABLE>

                                                                     (Continued)



                                     F - 13
<PAGE>

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

                                November 30, 1997


<TABLE>
<CAPTION>
                                                              Initial Cost
                                                       ----------------------------        Costs
                                                                         Building       capitalized
                                                                           and         subsequent to
              Description               Encumbrances        Land        Improvements     acquisition
<S>                                    <C>            <C>             <C>             <C>           

Office:
-------
      Charlotte, NC                    $     -        $    150,000    $    933,000    $   168,000   
      Greenville, SC                         -             246,000       2,490,000        489,000   
      Greenville, SC                         -             213,000       1,647,000        716,000   
      Ann Arbor, MI                          -             686,000       5,618,000      1,751,000   
      Tampa, FL                              -           2,667,000       8,980,000        603,000   
      Somerset, NJ                           -           3,264,000      13,379,000        983,000   
      Boston, MA                            (A)          1,730,000       6,925,000      2,388,000   
      Framingham, MA                        (A)          2,105,000       5,109,000        566,000   
      Andover, MA                         4,894,000      1,263,000       6,417,000        321,000   
      Boston, MA                             -             861,000         507,000        316,000   
      Portland, ME                        9,097,000        996,000      11,182,000        190,000   
      Portland, ME                        8,526,000      1,577,000      15,369,000         98,000   
      Glastonbury, CT                        -             649,000       3,011,000         36,000   
      Glastonbury, CT                        -             616,000       3,257,000         11,000   
      Nashua, NH                             -           1,106,000       3,504,000         10,000   
      Nashua, NH                             -             452,000       1,110,000              0   
      Nashua, NH                             -             499,000       1,768,000          9,000   
      Farmington, CT                         -             766,000       4,831,000              0   
                                      -------------    -----------     -----------     ----------   
                                         22,517,000     19,846,000      96,037,000      8,655,000   
                                      -------------    -----------     -----------     ----------   

Office/Research & Development:
------------------------------
      Billerica,  MA                        (A)            376,000       1,749,000          1,000   
      Bedford, MA                           (A)            662,000       1,585,000              0   
      Andover, MA                         4,321,000      1,441,000       5,799,000          9,000   
      Billerica, MA                         (A)            752,000       3,611,000              0   
      Billerica, MA                         (A)            420,000       1,652,000              0   
      Andover, MA                         3,681,000      1,185,000       5,307,000              0   
      Chelmsford, MA                         -             354,000       1,567,000        125,000   
      Billerica, MA                          -             681,000       4,111,000         14,000   
      Littleton, MA                          -             285,000       2,091,000              0   
      Chelmsford, MA                         -             946,000       3,680,000          4,000   
      Tewksbury, MA                       4,780,000      1,640,000       7,289,000         22,000   
      Andover, MA                            -           1,171,000       2,818,000          1,000   
      Westford, MA                           -           1,058,000       2,436,000              0   
                                      -------------    -----------     -----------     ----------   
                                         12,782,000     10,971,000      43,695,000        176,000   
                                      -------------    -----------     -----------     ----------   



<CAPTION>
                                          Gross amounts at which
                                        carried at close of period
                                  ---------------------------------------      Accumulated
                                                  Building                     Depreciation
                                                    and                           and           Date          Depreciable 
              Description            Land       Improvements       Total       amortization    acquired       Life (years) 
                                                                                                                           
<S>                              <C>          <C>            <C>            <C>                 <C>              <C>
Office:                                                                                                                    
-------                                                                                                                    
      Charlotte, NC            $    150,000   $  1,101,000   $  1,251,000   $    355,000         1/85              40      
      Greenville, SC                246,000      2,979,000      3,225,000      1,239,000         11/86             20      
      Greenville, SC                253,000      2,323,000      2,576,000      1,151,000         11/86             20      
      Ann Arbor, MI                 686,000      7,369,000      8,055,000      1,760,000         12/88             40      
      Tampa, FL                   2,667,000      9,583,000     12,250,000      3,346,000         12/88             25      
      Somerset, NJ                3,264,000     14,362,000     17,626,000      3,328,000         12/88             40      
      Boston, MA                  1,730,000      9,313,000     11,043,000        980,000         6/93              40      
      Framingham, MA              2,020,000      5,760,000      7,780,000        758,000         9/93              40      
      Andover, MA                 1,263,000      6,738,000      8,001,000        407,000         10/95             40      
      Boston, MA                    861,000        823,000      1,684,000         74,000         11/95             40      
      Portland, ME                  996,000     11,372,000     12,368,000        409,000         7/96              40      
      Portland, ME                1,577,000     15,467,000     17,044,000        556,000         7/96              40      
      Glastonbury, CT               651,000      3,045,000      3,696,000         44,000         4/97              40      
      Glastonbury, CT               618,000      3,266,000      3,884,000         48,000         4/97              40      
      Nashua, NH                  1,106,000      3,514,000      4,620,000         15,000         9/97              40      
      Nashua, NH                    452,000      1,110,000      1,562,000          5,000         9/97              40      
      Nashua, NH                    499,000      1,777,000      2,276,000          7,000         9/97              40      
      Farmington, CT                766,000      4,831,000      5,597,000              0         11/97             40      
                               ------------    -----------    -----------     ----------                                   
                                 19,805,000    104,733,000    124,538,000     14,482,000                                   
                               ------------    -----------    -----------     ----------                                   
                                                                                                                           
Office/Research & Development:                                                                                             
------------------------------                                                                                             
      Billerica,  MA                376,000      1,750,000      2,126,000        192,000         7/93              40      
      Bedford, MA                   662,000      1,585,000      2,247,000        162,000         11/93             40      
      Andover, MA                 1,441,000      5,808,000      7,249,000        588,000         11/93             40      
      Billerica, MA                 752,000      3,611,000      4,363,000        361,000         12/93             40      
      Billerica, MA                 420,000      1,652,000      2,072,000        165,000         12/93             40      
      Andover, MA                 1,185,000      5,307,000      6,492,000        475,000         5/94              40      
      Chelmsford, MA                354,000      1,692,000      2,046,000        159,000         11/94             40      
      Billerica, MA                 681,000      4,125,000      4,806,000        319,000         11/94             40      
      Littleton, MA                 285,000      2,091,000      2,376,000        113,000         9/95              40      
      Chelmsford, MA                946,000      3,684,000      4,630,000        199,000         10/95             40      
      Tewksbury, MA               1,648,000      7,303,000      8,951,000        320,000         3/96              40      
      Andover, MA                 1,171,000      2,819,000      3,990,000        100,000         7/96              40      
      Westford, MA                1,058,000      2,436,000      3,494,000         36,000         4/97              40      
                               ------------    -----------    -----------     ----------                                   
                                 10,979,000     43,863,000     54,842,000      3,189,000                                   
                               ------------    -----------    -----------     ----------                                   
                                                                                                                           

                                      F-14

<PAGE>

<CAPTION>
                                                                Initial Cost
                                                     -------------------------------       Costs      
                                                                         Building       capitalized
                                                                           and         subsequent to
              Description               Encumbrances        Land        Improvements     acquisition
<S>                                    <C>            <C>             <C>             <C>           
Industrial Properties:
----------------------
      N. Charleston, SC                      -             300,000       2,738,000         37,000   
      Bedford, MA                           (A)            512,000       2,062,000        154,000   
      Wilmington, MA                      4,179,000      2,390,000       4,638,000        209,000   
      Wilmington, MA                        (A)          1,394,000       3,208,000         73,000   
      Wilmington, MA                        (A)            501,000       2,013,000         61,000   
      Tewksbury,  MA                      8,448,000      1,739,000       8,994,000        723,000   
      Northborough, MA                       -             514,000       1,810,000         21,000   
      Marlborough, MA                        -           1,040,000       1,303,000          8,000   
      Marlborough, MA                        -             579,000       2,244,000        378,000   
      Franklin, MA                           -             599,000       3,256,000              0    
      Franklin, MA                           -             706,000       2,523,000              0    
      Franklin, MA                           -             932,000       4,160,000              0    
      Methuen, MA                            -             540,000       1,220,000          2,000   
      Methuen, MA                            -           1,334,000       3,518,000          3,000   
      Westford, MA                           -             698,000       2,783,000              0    
      Andover, MA                            -           1,084,000       3,444,000         15,000   
      Nashua, NH                             -             785,000       2,360,000              0    
      Nashua, NH                             -           1,478,000       3,641,000              0    
                                      -------------    -----------     -----------     ----------   
                                         12,627,000     17,125,000      55,915,000      1,684,000   
                                      -------------    -----------     -----------     ----------   

Retail:
-------
      Hagerstown, MD                         -             364,000       1,459,000              0    
      Nashville, TN                         (A)          1,570,000       2,655,000        447,000   
      Baltimore, MD                         (A)          2,000,000       5,710,000        109,000   
      Temple Terrace, FL                  4,873,000      2,600,000       6,540,000        307,000   
      Aurora, IL                         12,593,000     12,576,000      15,372,000      1,810,000   
      Peabody, MA                            -           4,705,000       5,623,000          1,000   
                                      -------------    -----------     -----------     ----------   
                                         17,466,000     23,815,000      37,359,000      2,674,000   
                                      -------------    -----------     -----------     ----------   

Apartments:
-----------
      Harrison Township, MI                 (A)            700,000       1,948,000     11,309,000   
      Tampa, FL                           5,071,000      1,850,000       7,009,000        844,000   
      Tampa, FL                           5,750,000      1,178,000       4,466,000        359,000   
      Bloomfield Hills, MI               10,502,000      4,325,000      12,126,000      1,881,000   
      Laurel, MD                          9,223,000        613,000      12,722,000       (112,000)    
                                      -------------    -----------     -----------     ----------   
                                         30,546,000      8,666,000      38,271,000     14,281,000   
                                      -------------    -----------     -----------     ----------   

Other
-----
      Portland, ME                        1,733,000      2,309,000          12,000              -
      Tampa, FL                              -             427,000               -              -
      Mount Clemens, MI                      -              25,000               -              -
                                      -------------    -----------     -----------     ------------   
                                          1,733,000      2,761,000          12,000               0    
                                      -------------    -----------     -----------     ------------   

                                       $ 97,671,000   $ 83,184,000    $271,289,000    $  27,470,000   
                                                       ===========     ===========     ============   

Lines of credit                        $ 15,500,000
                                      -------------





<CAPTION>
                                            Gross amounts at which
                                          carried at close of period
                               ------------------------------------------      Accumulated
                                                  Building                     Depreciation
                                                    and                           and           Date          Depreciable 
              Description            Land       Improvements       Total       amortization    acquired       Life (years) 
<S>                              <C>          <C>            <C>            <C>                 <C>              <C>
Industrial Properties:                                                                                                     
      N. Charleston, SC             300,000      2,775,000      3,075,000        891,000         12/84             40      
      Bedford, MA                   512,000      2,216,000      2,728,000        299,000         10/92             40      
      Wilmington, MA              2,390,000      4,847,000      7,237,000        575,000         5/93              40      
      Wilmington, MA              1,394,000      3,281,000      4,675,000        362,000         8/93              40      
      Wilmington, MA                501,000      2,074,000      2,575,000        170,000         11/94             40      
      Tewksbury,  MA              1,739,000      9,717,000     11,456,000        760,000         3/95              40      
      Northborough, MA              514,000      1,831,000      2,345,000        121,000         5/95              40      
      Marlborough, MA             1,040,000      1,311,000      2,351,000         79,000         6/95              40      
      Marlborough, MA               579,000      2,622,000      3,201,000        114,000         12/95             40      
      Franklin, MA                  599,000      3,256,000      3,855,000        156,000         12/95             40      
      Franklin, MA                  706,000      2,523,000      3,229,000        121,000         12/95             40      
      Franklin, MA                  932,000      4,160,000      5,092,000        130,000         8/96              40      
      Methuen, MA                   541,000      1,221,000      1,762,000         28,000         12/96             40      
      Methuen, MA                 1,335,000      3,520,000      4,855,000         81,000         12/96             40      
      Westford, MA                  698,000      2,783,000      3,481,000         46,000         3/97              40      
      Andover, MA                 1,088,000      3,455,000      4,543,000         43,000         5/97              40      
      Nashua, NH                    785,000      2,360,000      3,145,000         10,000         9/97              40      
      Nashua, NH                  1,478,000      3,641,000      5,119,000         15,000         9/97              40      
                               ------------    -----------    -----------     ----------                                   
                                 17,131,000     57,593,000     74,724,000      4,001,000                                   
                               ------------    -----------    -----------     ----------                                   
                                                                                                                           
Retail:                                                                                                                    
      Hagerstown, MD                364,000      1,459,000      1,823,000        473,000         12/84             40      
      Nashville, TN               1,570,000      3,102,000      4,672,000      1,121,000         8/86              40      
      Baltimore, MD               1,832,000      5,987,000      7,819,000      1,551,000         7/87              40      
      Temple Terrace, FL          2,600,000      6,847,000      9,447,000      1,753,000         12/87             40      
      Aurora, IL                 12,576,000     17,182,000     29,758,000      3,866,000         5/90              25      
      Peabody, MA                 4,705,000      5,624,000     10,329,000        330,000         8/95              40      
                               ------------    -----------    -----------     ----------                                   
                                 23,647,000     40,201,000     63,848,000      9,094,000                                   
                               ------------    -----------    -----------     ----------                                   
                                                                                                                           
Apartments:                                                                                                                
      Harrison Township, MI         700,000     13,257,000     13,957,000      5,606,000         11/74             40      
      Tampa, FL                   1,850,000      7,853,000      9,703,000      2,356,000         10/86             40      
      Tampa, FL                   1,178,000      4,825,000      6,003,000      1,158,000         3/88              40      
      Bloomfield Hills, MI        4,325,000     14,007,000     18,332,000      4,906,000         1/89              40      
      Laurel, MD                    613,000     12,610,000     13,223,000      2,366,000         9/90              40      
                               ------------    -----------    -----------     ----------                                   
                                  8,666,000     52,552,000     61,218,000     16,392,000                                   
                               ------------    -----------    -----------     ----------                                   
                                                                                                                           
Other                                                                                                                      
      Portland, ME                2,309,000         12,000      2,321,000              -         7/96                      
      Tampa, FL                     427,000              -        427,000              -         12/95                     
      Mount Clemens, MI              25,000              -         25,000              -         7/86                      
                               ------------    -----------    -----------     ----------                                   
                                  2,761,000         12,000      2,773,000             0                                    
                               ------------    -----------    -----------     ----------                                   
                                                                                                                           
                               $ 82,989,000   $298,954,000   $381,943,000   $ 47,158,000                                   
                               ============    ===========    ===========     ==========                                   


</TABLE>

                                      F-15


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




<PAGE>

                                                                    Schedule III
                                                                     (Continued)

                                 MGI PROPERTIES

                    Real Estate and Accumulated Depreciation

                  Years ended November 30, 1997, 1996 and 1995


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

Real Estate Investments
<TABLE>
<CAPTION>
                                                                1997                  1996                   1995
<S>                                                     <C>                   <C>                    <C>              
Balance at beginning of year                            $     356,024,000     $     293,469,000      $     267,530,000

     Add:
        Investments                                            48,000,000            59,950,000             38,302,000
        Building improvements                                   3,114,000             3,307,000              1,825,000
        Tenant improvements                                     2,669,000             2,702,000              2,542,000
                                                            -------------         -------------          -------------
                                                              409,807,000           359,428,000            310,199,000
     Deduct:
        Real estate dispositions                               24,046,000             3,404,000             15,385,000
        Fully amortized assets and other                        3,818,000                   --               1,345,000
                                                            -------------         -------------          -------------

Balance at end of year                                  $     381,943,000     $     356,024,000      $     293,469,000
                                                            =============         =============          =============

Accumulated Depreciation and Amortization

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

     Add:
        Depreciation and amortization                           9,874,000             8,832,000              7,798,000

     Deduct:
        Real estate dispositions                                4,292,000               397,000              1,701,000
        Other                                                   3,234,000                   --               1,751,000
                                                            -------------         -------------          -------------

Balance at end of year                                  $      47,158,000     $      44,810,000      $      36,375,000
                                                            =============         =============          =============
</TABLE>

The aggregate cost for Federal income tax purposes of the above investments at
November 30, 1997 is approximately $378 million.

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





                                     F - 16
<PAGE>

                                                                      Exhibit XI


                                 MGI PROPERTIES

                       Computation of Net Income Per Share
                             Assuming Full Dilution

                             Year ended November 30,


<TABLE>
<CAPTION>
                                             1997             1996            1995              1994              1993
<S>                                  <C>              <C>               <C>              <C>               <C>          
Net income                           $   20,466,000   $    24,305,000   $   14,319,000   $    14,491,000   $   7,957,000
                                        ===========       ===========      ===========        ==========      ==========

Weighted average number of
    common shares outstanding            13,289,781        11,540,972       11,487,677        11,450,451      10,574,104

Additional number of share
    equivalents assuming
    exercise of options                     348,740           180,257           82,408            91,834          55,312
                                        -----------       -----------      -----------       -----------      ----------

Weighted average number of
    shares assuming full
    dilution                             13,638,521        11,721,229       11,570,085        11,542,285      10,629,416
                                        ===========       ===========      ===========        ==========      ==========

Net income per share assuming
     full dilution                           $ 1.50            $ 2.07           $ 1.24            $ 1.26           $ .75
                                               ====              ====             ====              ====             ===
</TABLE>




                                     F - 17
<PAGE>


                         Consent of Independent Auditors


The Board of Trustees
MGI Properties:


We consent to incorporation by reference in the registration statements (Nos.
33-21584, 2-97270, 33-65844, 33-53433 and 33-63901) on Form S-8 of MGI
Properties and subsidiaries of our report dated December 18, 1997, relating to
the consolidated balance sheets of MGI Properties and subsidiaries as of
November 30, 1997 and 1996, and the related consolidated statements of earnings
and cash flows for each of the years in the three-year period ended November 30,
1997, and related schedule, which report appears in the November 30, 1997 annual
report on Form 10-K of MGI Properties and subsidiaries.






                                                           KPMG Peat Marwick LLP


Boston, Massachusetts
December 18, 1997