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

                                    FORM 10-K
                                   (Mark One)
[X]    Annual report pursuant to Section 13 or 15(d) of the Securities Exchange 
       Act of 1934

       For the fiscal year ended                           December 31, 1998    

                                                        OR

[ ]    Transition report pursuant to Section 13 or 15(d) of the Securities 
       Exchange Act of 1934

       For the transition period from                                         to

      Commission file number    1-10641

                           MILESTONE PROPERTIES, INC.
             (Exact name of registrant as specified in its charter)

       Delaware                                            65-0158204           
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)

150 E. Palmetto Park Rd. 4th Floor, Boca Raton, FL                33432        
---------------------------------------------------      ----------------------
(Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code          (561) 394 - 9533   
                                                        ----------------------

       Securities Registered under Section 12(b) of the Exchange Act: None

         Securities Registered under Section 12 (g) of the Exchange Act:

                     Common Stock, par value $.01 per share
                                (Title of Class)

       $.78 Convertible Series A Preferred Stock, par value $.01 per share
                                (Title of Class)

       Indicate by check mark whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

       Indicate 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 the  Registrant's  knowledge,  in definitive proxy or information
statements  incorporated  by  reference  in Part III of this Form 10-K or by any
amendment to this Form 10-K. [x]

       The aggregate market value of the voting stock held by  non-affiliates of
the  Registrant,  computed  by  reference  to the average bid and asked price on
March 12, 1999, was  approximately  $1.25 for the Common Stock and $2.82 for the
$.78 Convertible Series A Preferred Stock.

       As of March 12, 1999,  4,943,633 shares of the Registrant's  Common Stock
were outstanding and 16,423 shares of the Registrant's $.78 Convertible Series A
Preferred Stock were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                                  Location in Form 10-K in Which
   Document                                           Document is Incorporated  

 Registrant's 1999 Proxy Statement to be filed                 Part III
with the Commission no later than April 30, 1999



<PAGE>



                                TABLE OF CONTENTS


                                                      PART I


Item 1.        Business . . . . . . . . . . . . . . . . . . . . . . . . .  1 
Item 2.        Description of Property . . . . . . . . . . . . . . . . . .14 
Item 3.        Legal Proceedings . . . . . . . . . . . . . . . . . . . . .18 
Item 4.        Submission of Matters to a Vote of Security Holders . . . .19


                                                      PART II

Item 5.        Market for Registrant's Common Stock and Related
               Stockholder Matters . . . . . . . . . . . . . . . . . . . .20 
Item 6.        Selected Financial Data . . . . . . . . . . . . . . . . . .22 
Item 7.        Management's Discussion and Analysis of Financial
               Condition and Results of Operations . .. . . . . . . . . . 23
Item 7A.       Quantitative and Qualitative Disclosures about Market Risk 31
Item 8.        Financial Statements and Supplementary Disclosure . . . . .31
Item 9.        Changes in and Disagreements with Accountants on
               Accounting and Financial Disclosure . . . . . . . . . . . .31


                                                     PART III

Item 10.       Directors and Executive Officers of the Registrant . . . . 32
Item 11.       Executive Compensation . . . . . . . . . . . . . . . . . . 32 
Item 12.       Security Ownership of Certain Beneficial Owners
               and Management . . . . . . . . . . . . . . . . . . . . . . 32 
Item 13.       Certain Relationships and Related Transactions . . . . . . 32


                                                      PART IV

Item 14.       Exhibits, Financial Statement Schedule and Reports
               on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . .33 


SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . .F-1




<PAGE>



                                                      PART I

This Annual  Report on Form 10-K for the year ended  December  31, 1998 filed by
Milestone Properties,  Inc.  ("Milestone") contains or incorporates by reference
certain  forward-looking  statements  within the  meaning of Section  27A of the
Securities  Act of 1933 and Section 21E of the  Securities  Exchange Act of 1934
and  Milestone  intends that such  forward-looking  statements be subject to the
safe harbors created thereby. Such forward-looking  statements involve risks and
uncertainties and include,  but are not limited to, statements  regarding future
events  and its plans,  goals and  objectives.  Such  statements  are  generally
accompanied  by words such as  "intend,"  "anticipate,"  "believe,"  "estimate,"
"expect" or similar terms. Milestone's actual results may differ materially from
such  statements.  Factors that could cause or  contribute  to such  differences
include,   without  limitation,   the  following:  (i)  its  plans,  strategies,
objectives, expectations and intentions are subject to change at any time at its
discretion;  (ii) general  economic and business  conditions,  which may,  among
other  things,  affect  the  demand  for  retail  space or  retails  goods,  the
availability and creditworthiness of prospective  tenants,  rental terms and the
terms and  availability of financing,  are subject to change at any time;  (iii)
adverse  changes  in  real  estate  markets   including,   among  other  things,
competition  with  other  companies;  (iv)  adverse  changes  in the  properties
Milestone  owns which could require the  expenditure of funds to fix or maintain
such  properties;   (v)  the  general  risks  of  real  estate  development  and
acquisitions,  such  as  changes  in  demographics,  construction  delays,  cost
overruns,  work stoppages and slowdowns,  the cost and  availability  of skilled
labor and weather conditions; (vi) governmental actions and initiatives, such as
seizures of property,  condemnation  and  construction of alternative  roadways;
(vii)  environmental and safety  conditions and hazards;  (viii) the adequacy of
Year 2000 compliance measures; and (ix) other risks and uncertainties  indicated
from  time to time in  Milestone's  filings with  the  Securities  and  Exchange
Commission  and in the  documents  incorporated  herein by  reference.  Although
Milestone   believes  that  the  assumptions   underlying  its   forward-looking
statements are reasonable,  any of the assumptions  could prove  inaccurate and,
therefore, Milestone cannot make any assurances that the results contemplated in
such  forward-looking  statements  will  be  realized.  The  inclusion  of  such
forward-looking  information  should  not be  regarded  as a  representation  by
Milestone  or any other  person that the future  events,  plans or  expectations
contemplated by Milestone will be achieved. Furthermore, past performance is not
necessarily an indicator of future performance.

Item 1.        Business.

Introduction

         Milestone  Properties,  Inc.,  directly  and through  its wholly  owned
subsidiaries,  is  engaged  in the  business  of  owning,  acquiring,  managing,
developing  and  investing  in  commercial  real estate and real estate  related
assets. Milestone, together with its subsidiaries, is hereinafter referred to as
the "Company." The Company is primarily engaged in the ownership,  operation and
management  of  interests  in  commercial  real  estate  properties,   currently
consisting of (i) 10 properties  owned in fee (the "Fee  Properties"),  (ii) the
ownership of wraparound notes (the "Wraparound Notes") and wraparound  mortgages
(the "Wraparound  Mortgages" and,  together with the Wraparound Notes, the "Wrap
Debt")  which are secured by 25  commercial  real  properties  (the  "Underlying
Properties" and,  together with the Fee Properties,  the "Properties") and (iii)
the operation and management of the Properties.  The Properties include shopping
centers, strip malls and single tenant properties and

                                                         1

<PAGE>



have an aggregate gross leasable area ("GLA") of 2,218,645 square feet, of which
435,386 square feet are in the Fee  Properties  and 1,783,259 square feet are in
the Underlying  Properties.  Additional  information regarding the Properties is
set forth in Table 1. Summary of Properties and Underlying  Debt located in Item
2. Description of Property of this Report.

         The Company's  objectives are to realize upon, maintain and improve the
value of its real estate holdings and to generate cash flow. To accomplish these
objectives, the Company may (i) continue to manage the Properties,  (ii) acquire
additional  commercial  properties to develop and/or hold for investment,  (iii)
expand, improve or redevelop the Properties or properties owned by affiliates of
the Company or third parties through the acquisition and development of adjacent
parcels, (iv) engage in management services for affiliates of the Company and/or
others,  (v) invest in real estate  backed or related  securities,  (vi) acquire
related businesses and/or (vii) engage in such other activities or businesses as
are consistent  with the Company's  overall  objectives.  In connection with its
activities,  the  Company  may  also  consider  selling  one or  more of its Fee
Properties  and/or  financing or  refinancing  one or more of the  Properties or
additional  properties  acquired  by the  Company in order to fund its  business
activities.  In  addition,  the  Company  may enter into joint  ventures  and/or
similar  arrangements  with  developers  or owners of shopping  centers or other
commercial  properties.  These  ventures  may take the form of joint  ownership,
participation in general or limited partnerships,  or other forms of investment,
and may  provide  for the  payment  of  preferential  distributions,  guaranteed
returns and/or fees for services.  The Company may also make secured real estate
mortgage  loans,   including   mortgages   junior  to   institutional  or  other
indebtedness, in connection with the acquisition, development,  redevelopment or
improvement of properties, either to affiliated or unaffiliated parties.

         The  Company's  business is operated as a single  segment for financial
reporting  purposes.  For  financial  information  regarding the Company for the
fiscal  years ended  December  31,  1998,  1997 and 1996,  see the  Consolidated
Financial  Statements  of the Company and the notes thereto in Part IV, Item 14.
Exhibits, Financial Statement Schedule and Reports on Form 8-K of this Report.

Background

         Milestone was  incorporated  on November 30, 1989 under the laws of the
State of Delaware.  On December 18, 1990,  Concord  Milestone  Income Fund, L.P.
("CMIF") and Concord  Milestone Income Fund II, L.P. ("CMIF II")  (collectively,
the  "Predecessor  Partnerships")  were  merged  with  and into  Milestone  (the
"Merger"). In the Merger,  Milestone succeeded to the business and operations of
the Predecessor  Partnerships  and the partnership  interests in the Predecessor
Partnerships  were converted into shares of Milestone's  common stock, par value
$.01 per share (the "Common Stock") and of Milestone's $.78 Convertible Series A
preferred stock, par value $.01 per share (the "Series A Preferred Stock").



                                                         2

<PAGE>



         In October  1995,  the Company  entered  into various  agreements  with
affiliates of Concord Assets Group,  Inc., a New York  corporation  ("Concord"),
pursuant to which the Company acquired (the  "Acquisition"),  for  approximately
$700,000  in cash and  2,545,000  shares of  Common  Stock,  certain  of the Fee
Properties and certain other properties  acquired in fee (which other properties
have since been sold) and certain of the Wrap Debt and certain other  wraparound
notes and wraparound mortgages (together,  the "Satisfied Wrap Debt") which have
been paid as a result of the sale of the properties  securing the Satisfied Wrap
Debt by the owner of the  properties.  As a result,  the  Company  realized  its
interests in the  Satisfied  Wrap Debt.  Concord is owned by two  directors  and
executive officers of Milestone. The directors and executive officers of Concord
are also directors and executive officers of Milestone.  Currently,  Concord and
its  affiliates  beneficially  own  approximately  70% of the  Common  Stock and
approximately 28% of the Series A Preferred Stock.

         At the close of  business  on March 5,  1999,  Milestone  canceled  and
retired 2,983,284 shares of its Series A Preferred Stock,  representing  greater
than 99% of the then outstanding shares of Series A Preferred Stock, pursuant to
the  terms of a court  approved  settlement  of a  purported  class  action  and
derivative  lawsuit brought against  Milestone,  certain of its past and present
members  of its Board of  Directors  and  executive  officers,  and  Concord  in
connection  with  the  Acquisition.   See  Item  3.  Legal  Proceedings,  for  a
description of the court approved  settlement of the purported  class action and
derivative lawsuit.

The Wrap Debt

         Certain material terms generally  appearing in the Wraparound Notes and
Wraparound Mortgages are described below. Since the provisions of the Wraparound
Notes and Wraparound  Mortgages are complex and extensive,  and provisions  vary
among the Wraparound Notes and Wraparound Mortgages, no attempt has been made to
describe in detail or to summarize all  provisions of the  Wraparound  Notes and
Wraparound Mortgages.

         The Wrap Debt was issued to  affiliates  of Concord by certain  limited
partnerships  (the  "Partnerships")  sponsored by Concord.  Such  affiliates  of
Concord were formed for the purposes of (i) acquiring the Underlying Properties,
(ii) selling such  properties to the  Partnerships  in exchange for cash and the
Wrap Debt and (iii) leasing the Underlying Properties back from the Partnerships
pursuant to master leases (the "Master Leases"). The payment of the Wrap Debt is
secured by the  Underlying  Properties.  Certain  directors  and officers of the
Company are also directors, officers and controlling stockholders of the general
partner of each of the Partnerships (the "General  Partners").  In October 1995,
as part of the  Acquisition,  the Company  acquired certain of the Wrap Debt and
became the lessee under the Master Leases.



                                                         3

<PAGE>



         As the holder of the Wrap Debt,  the Company is required to satisfy the
obligations under notes and mortgages held by lenders  (typically banks or other
commercial  lenders) on each Underlying  Property with a priority senior to that
of the Company,  including,  without limitation, debt owed to the prior owner of
such property  under any purchase money notes issued by the  Partnerships  which
own the respective  Underlying  Property in connection with the  acquisitions of
such respective Underlying Property (all such senior indebtedness being referred
to herein collectively as the "Underlying Debt"). The Partnerships are obligated
to the Company for the Wrap Debt which wraps around and includes the  obligation
to pay the  Underlying  Debt,  and is secured by a  mortgage  on the  Underlying
Property.  The Wrap Debt is in a second priority  position behind the Underlying
Debt and, in some instances, may be in a third priority position overall, behind
a bank or commercial lender and a seller or other second priority lender.

         A description of the current balances, interest rates, monthly payments
of principal and interest,  prepayment provisions,  maturity dates and amount of
any balloon payments with respect to the Underlying Debt is set forth in Table 1
in Item 2. Description of Property.

         The Wraparound Notes

         The  Company  is the  holder of 40  Wraparound  Notes  relating  to the
Underlying  Properties.  The maturity dates of the Wraparound  Notes ranged from
1998 to 2016. A discussion regarding a Wraparound Note which matured in 1998 and
the  Wraparound  Notes which are due to mature in 1999 is included at the end of
the section  entitled  Wraparound  Mortgages.  Each of the Wraparound Notes is a
non-recourse  obligation of the issuing  Partnership and includes the obligation
to satisfy the Underlying Debt for the corresponding  Underlying  Property.  The
Underlying  Debt  associated  with an  Underlying  Property  in  some  instances
consists of multiple notes and mortgages which may have different  priorities in
relation  to one  another,  but  all of  which  are  superior  in  right  to the
Wraparound  Note  and  the  Wraparound  Mortgage  relating  to  such  Underlying
Property.  A Wraparound Note may be prepaid by the Partnership issuing such note
by (i)  the  payment  of the  excess  of (a)  the  outstanding  balance  of such
Wraparound  Note,  including  accrued interest and any discount element over (b)
the then aggregate  outstanding  balance,  including  accrued  interest,  of the
Underlying Debt associated with the particular Underlying Property, and (ii) the
assumption  of  the  borrower's  obligations  pursuant  to the  Underlying  Debt
associated with the particular Underlying Property.  The wraparound  mortgagor's
(i.e.,  the Partnership  owning the Underlying  Property) source of debt service
payments on the  Wraparound  Note is the rent it  receives  as lessor  under the
Master  Leases.  Additionally,  any percentage  rent payable to the  Partnership
pursuant  to a Master  Lease  will be paid to the  Company  as the holder of the
Wraparound Note on the relevant  Underlying Property as partial prepayment under
such Wraparound Note.

         A description  of the current  balances,  interest  rates,  annual debt
service,  maturity dates and amounts of any balloon payments with respect to the
Wraparound Notes is set forth in Table 2 in Item 2. Description of Property.




                                                         4

<PAGE>



         The Wraparound Mortgages

         The Company is the holder of 40  Wraparound  Mortgages  relating to the
Underlying  Properties.  The maturity dates of the Wraparound  Mortgages  ranged
from 1998 to 2016. A discussion regarding a Wraparound Mortgage which matured in
1998 and the Wraparound Mortgages which are due to mature in 1999 is included at
the end of this section.  The Wraparound  Mortgages provide that the Company, as
the  wraparound  mortgagee,  will pay,  or cause to be paid,  on a  non-recourse
basis,  all payments  required by the Underlying  Debt so long as the wraparound
mortgagor  (i.e.,  the Partnership  that owns the related  Underlying  Property)
makes all payments  under the  Wraparound  Notes to the Company.  If the Company
fails to make any payment required to be made by it within 30 days after the due
date of such payment,  the wraparound mortgagor may make such payment and deduct
the amount of such payment from the next succeeding payments required to be made
under the  Wraparound  Note. The  Partnerships,  as wraparound  mortgagors,  are
obligated  under the terms of the  Wraparound  Mortgages  not to perform any act
which would  constitute  a breach of the  underlying  mortgage(s)  securing  the
applicable Underlying Debt.

         The Wraparound  Mortgages  provide that the Partnership,  as wraparound
mortgagor of each Underlying  Property,  will maintain all buildings,  equipment
and other improvements on the related Underlying Property. In the event that the
buildings and any other  improvements  are damaged or destroyed,  in whole or in
part,  or in the event of a taking of a portion of the premises  under the power
of eminent domain,  the wraparound  mortgagor is required to restore the same as
nearly  as  possible  to the  condition  they were in  immediately  prior to the
casualty or taking.  Insurance  proceeds  and  condemnation  awards will be made
available,  subject to the  wraparound  mortgagee's  control  and subject to the
rights of the holders of the underlying  mortgages,  to the extent  necessary to
comply with the  foregoing.  The  wraparound  mortgagor  is required to maintain
property,  casualty and public liability  insurance on each Underlying  Property
and cannot remove improvements or fixtures or structurally alter any building.

         Pursuant  to the terms of the  Wraparound  Mortgages,  the  outstanding
balance of each  corresponding  Wraparound Note becomes due and payable upon the
occurrence  of  certain  specified  events,  subject to grace  periods  and cure
rights,  including,  without  limitation,  (i)  the  failure  of the  wraparound
mortgagor to make any payment or perform any covenant required under the related
Wraparound  Mortgage,  (ii) the  commencement  of any  action or  proceeding  to
foreclose  any lien senior to the lien created by such  Wraparound  Mortgage and
(iii) the  Partnerships,  as  wraparound  mortgagors,  becoming  the debtor in a
bankruptcy  or  insolvency  proceeding.  In  addition,  after any default by the
wraparound mortgagor under a Wraparound Mortgage, the Company, as the wraparound
mortgagee,  may exercise certain rights of the wraparound mortgagor with respect
to the management of the related Underlying Property.



                                                         5

<PAGE>



         The Company, as the wraparound  mortgagee,  has the right to refinance,
restructure,  alter, increase, renew or rearrange the Underlying Debt subject to
certain  terms  and  conditions,  including,  without  limitation,  that (i) the
refinanced portion of the Underlying Debt cannot increase the obligations of the
wraparound mortgagor, except in certain limited circumstances and (ii) the rents
payable on the  Underlying  Properties  pursuant  to the  operating  leases (the
"Operating  Leases") on the related  Underlying  Properties should reasonably be
expected to satisfy the debt service  obligations on the  refinanced  portion of
the Underlying  Debt.  The wraparound  mortgagor is required to cooperate in the
execution of documents necessary to effectuate the refinancing, so long as it is
not required to become obligated thereon.

         On December 31, 1998,  the Wraparound  Note on the Underlying  Property
located in Quincy,  Illinois (the "Quincy Property") matured. The face amount of
the Wraparound Note on the Quincy  Property is  approximately  $4,904,000,  such
amount  is net of the 1998  principal  payment  of  $728,919  which  was paid in
January 1999. The Company,  as the holder of the  Wraparound  Note on the Quincy
Property,  is currently  seeking payment from the  Partnership  that issued such
Wraparound  Note. On March 1, 1999, the mortgagor of the Underlying  Debt on the
Quincy Property sent a demand letter seeking to collect the outstanding  balance
of  approximately  $2,910,000 of the  Underlying  Debt which had matured in July
1998. In accordance with the terms of the wraparound  mortgages,  the Underlying
Debt on the Quincy  Property  must be satisfied  prior to the Company  receiving
payment from the Partnership on the Wraparound Note on the Quincy Property.  See
the  discussion  regarding the Quincy  Property in the section  entitled  Master
Leases herein.

         The maturity dates of the remaining 39 Wraparound  Notes and Wraparound
Mortgages  range from  December  1999 to December  2016,  of which 17 Wraparound
Notes and  Wraparound  Mortgages  are due to mature on  December  31,  1999 (the
"Maturing  Wrap Debt").  The Company,  as the holder of the Maturing  Wrap Debt,
will seek payment from the applicable  Partnership  of the  respective  Maturing
Wrap Debt issued by such Partnership. In order for each such Partnership to make
such payment,  one of the following  events may occur:  (i) the  Partnership may
sell the Underlying  Property  securing the respective  Maturing Wrap Debt, (ii)
the Company,  as the holder of the Maturing Wrap Debt,  may obtain  ownership of
the  Underlying  Property  securing the Maturing Wrap Debt in lieu of payment on
the Maturing Wrap Debt via foreclosure  sale or (iii) the Company may extend the
Maturing Wrap Debt to a future maturity date upon terms to be determined at that
time.


The Master Leases

         Certain  material  terms  generally  appearing in the Master Leases are
described  below.  Since the  provisions  of the Master  Leases are  complex and
extensive, and provisions vary among the Master Leases, no attempt has been made
to describe in detail or to summarize all provisions of the Master Leases.



                                                         6

<PAGE>



         The Company is the master lessee under 25 individual  leases on each of
the Underlying Properties. The expiration dates of the Master Leases ranged from
1998 to 2016. A discussion regarding the Master Leases which expired in 1998 and
the Master Leases which are due to expire in 1999 is included at the end of this
section.  As the master lessee, the Company leases an entire Underlying Property
(i.e., a shopping center or single tenant commercial property) from the owner of
such  Underlying  Property  and  re-leases  it  under  Operating  Leases  to the
tenant(s) who occupy such property.

         The Master Leases were initially entered into by affiliates of Concord,
as tenants,  and the  Partnerships,  as landlords,  and are coterminous with the
Wraparound Notes and Wraparound Mortgages. The rent payable by the Company under
each Master Lease for an Underlying Property is approximately the same amount as
the debt service due under each Wraparound  Note for such  Underlying  Property.
The Company is both the holder of each Wrap Debt and the lessee under the Master
Leases relating to the Underlying Properties. Prior to the Acquisition,  certain
of  Concord's  affiliates,  as  tenants,  and  certain of the  Partnerships,  as
lessors,  amended the applicable  Master Leases  pursuant to which,  among other
things,  the rent payable  under such Master Leases was reduced by the amount of
the fees, if any,  payable by the lessor to the General  Partner.  As the master
lessee and the wraparound  mortgagee,  the Company  collects the rents under the
Operating  Leases and  applies  such  amounts to the  operating  expenses of the
Underlying  Property and the payment of the Underlying  Debt. The obligations of
the Company as master lessee under the Master Leases are  guaranteed by Concord.
Such  guaranty was not affected by the  transfer  and  assignment  of the master
lessee interest in the Master Leases to the Company pursuant to the Acquisition,
and the Company is not  obligated  to  indemnify  Concord  with  respect to such
guaranty. The Master Leases are subject and subordinate to the Underlying Debt.

         As between  the  Company,  as lessor,  and the  operating  tenants,  as
lessees,  the  tenants  are  generally  responsible  for payment of rents to the
Company and, in some instances,  for all or a portion of their pro rata share of
operating  expenses and, to a lesser extent,  for the  maintenance and repair of
the Underlying Property.

         Pursuant to the Master Leases, the Company,  as master lessee, (i) pays
a fixed  base rent to the  applicable  Partnership,  as master  lessor,  (ii) is
entitled to receive the revenues payable under the Operating Leases and (iii) is
responsible for operating the Underlying Property. The Company is also obligated
to pay percentage  rent to the Partnership  equal to certain  percentages of net
operating income in excess of certain  threshold  amounts,  which are subject to
adjustment.

         Each  Partnership,  as  master  lessor  under  the  Master  Leases,  is
responsible for the maintenance, repair and replacement of the physical property
when necessary.  The Company,  as master lessee,  can cause the Partnership,  as
master lessor, subject to certain limitations, to borrow additional amounts on a
wraparound basis to finance improvements to the related Underlying Property.




                                                         7

<PAGE>



         Pursuant  to each Master  Lease,  the  Company,  as master  lessee,  is
responsible  for compliance  with all  applicable  laws and  regulations  and is
required to keep the Underlying  Property  insured at certain minimum levels for
certain specified losses. The Company's  management believes that the Properties
are adequately  insured.  The Master Leases also have termination and assignment
provisions.

         The  Underlying  Debt on the  Quincy  Property  came due in July  1998.
Beginning July 1998, the mortgagor on the Underlying Debt did not demand payment
while the  Partnership,  which owns the Quincy  Property,  attempted to sell the
Quincy  Property.  Although the Underlying  Debt on the Quincy  Property has not
been  satisfied,  regular  monthly debt  payments  have been made by the Company
through March 1999. On March 1, 1999, the mortgagor of the Underlying  Debt sent
a demand letter  seeking to collect the  outstanding  balance of the  Underlying
Debt of approximately  $2,910,000.  Previously, on December 31, 1998, the Master
Lease  on the  Quincy  Property  expired.  As a  result  of  such  Master  Lease
expiration,  the Company, as the tenant under such Master Lease, assigned all of
its  rights,  title  and  interests  in the  Quincy  Property  to  Quincy  Plaza
Associates,  the landlord  under such Master  Lease and Quincy Plaza  Associates
assumed all of the Company's related obligations under such Master Leases.

     On December 31, 1998, the Master Lease on the property  located in Natchez,
Mississippi (the "Natchez  Property")  expired. As a result of such Master Lease
expiration,  the Company, as the tenant under such Master Lease, assigned all of
its  rights,  title and  interests  in the  Natchez  Property to Quincy II Plaza
Associates,  the landlord under such Master Lease and Quincy II Plaza Associates
assumed all of the Company's related obligations under such Master Lease.

         The  expiration  dates of the  remaining  23 Master  Leases  range from
December  1999 to December  2016, of which 15 Master Leases are due to expire on
December 31, 1999 (the "Expiring  Master  Leases").  As a result of the Expiring
Master Leases, the Company, as the tenant under such Expiring Master Leases, may
(i) assign all of its rights,  title and interests in the Underlying  Properties
subject to the respective  Expiring Master Leases to the applicable  Partnership
that is the landlord under the Expiring  Master Leases and such  Partnership may
assume all of the Company's related  obligations  under the respective  Expiring
Master Leases or (ii) may extend such Expiring Master Leases based upon terms to
be determined at that time.

         The amount of annual  rents due with  respect to each Master  Lease and
the termination dates thereof are set forth in Table 2 in Item 2. Description of
Property.

Acquisition and Disposition of Real Estate and Real Estate Related Assets

         On November 10,  1998,  the Company  completed  the purchase of Lincoln
Park, a 46,190 square strip mall located in Davie,  Florida  (Broward
County),  from an unrelated third party for  $3,840,000.  In connection with the
purchase,  the Company  obtained a $3,219,000  first  mortgage  loan which bears
interest  at a rate of 7.58% per annum.  Such first  mortgage  requires  monthly
principal and interest payments of $22,684 based upon a 30 year self liquidating
amortization  schedule,  with a balloon payment of approximately  $2,854,000 due
November 1, 2008. The strip mall is currently 97% occupied by local tenants
who are subject to Operating  Leases ranging from one to five years with various
renewal options.

                                                         8

<PAGE>



         On October 27, 1998,  the Company  completed the purchase of Pine Crest
Square, a 40,408 square foot strip mall located in Fort Lauderdale, Florida
(Broward  County),  from an unrelated third party for $3,200,000.  In connection
with the purchase,  the Company  obtained a $2,400,000 first mortgage loan which
bears interest at a rate of 7.0% per annum. Such first mortgage requires monthly
principal and interest payments of $15,967 based upon a 30 year self liquidating
amortization  schedule,  with a balloon payment of approximately  $2,063,000 due
November  11,  2008.  The  strip mall is  currently  97% occupied by local
tenants  subject to Operating  Leases  ranging from one to 19 years with various
renewal options.

         On October 13,  1998,  the Company  completed  the purchase of Mandarin
Central,  a 63,346 square foot strip mall located in Jacksonville,  Florida
(Duval County), from an unrelated third party for $4,650,000. In connection with
the purchase,  the Company obtained a $3,950,000 first mortgage loan which bears
interest  at a rate of 8.0% per annum.  Such  first  mortgage  requires  monthly
principal and interest payments of $28,984 based upon a 30 year self liquidating
amortization  schedule,  with a balloon payment of approximately  $3,542,000 due
October 1, 2008. The strip mall is currently 93% occupied by local tenants
subject to Operating  Leases  ranging from one to 16 years with various  renewal
options.

         On October 1, 1998, a wraparound  note held by the Company on a 285,655
square foot shopping center property located in South Williamson,  Kentucky (the
"South  Williamson  Property")  was  paid as a result  of the sale of the  South
Williamson  Property  by its owner,  an  affiliate  of the  Company  (i.e.,  the
Partnership  that owned the South  Williamson  Property),  to an unrelated third
party.  In  connection  with  the sale of the  South  Williamson  Property,  the
Company,  as the  master  lessee  on a  Master  Lease  on the  South  Williamson
Property,  canceled such Master Lease.  The negotiated  sale  price of the South
Williamson  Property was approximately  $14,874,000 which included acquiring the
property subject to the $14,773,655 remaining balance of the underlying mortgage
debt on the South Williamson  Property (which  represented  approximately 21% of
Company's  total  liabilities at such time).  The  wraparound  note on the South
Williamson Property represented  approximately 13% of the Company's total assets
at such  time.  As a result of the sale of the South  Williamson  Property,  the
payment of the wraparound note and the  satisfaction of the underlying  mortgage
debt,  the Company  realized  approximately  $100,000 in cash and a book gain of
approximately $4,197,000.

         On  September  21,  1998,  a  wraparound  note held by the Company on a
35,496 square foot shopping center property  located in Vestivia Hills,  Alabama
(the  "Vestivia  Hills  Property"),  was  paid as a  result  of the  sale of the
Vestivia  Hills Property by its owner,  an affiliate of the Company  (i.e.,  the
Partnership  that owned the Vestivia  Hills  Property),  to an  unrelated  third
party. In connection with the sale of the Vestivia Hills Property,  the Company,
as the master lessee on a Master Lease on the Vestivia Hills Property,  canceled
such Master Lease.  The negotiated sale price of the Vestivia Hills Property was
approximately  $1,640,000.  Of the gross proceeds,  $722,638 was used to satisfy
the underlying  mortgage debt on the Vestivia Hills Property (which  represented
approximately  1%  of  the  Company's  total  liabilities  at  such  time).  The
wraparound note on the Vestivia Hills Property  represented  approximately 3% of
the Company's total assets at such time. As a result of the sale of the Vestivia
Hills Property,  the payment of the wraparound note and the  satisfaction of the
underlying   mortgage   debt,   the  Company   realized  net  cash  proceeds  of
approximately $875,000 and a book gain of approximately $338,000.

                                                         9

<PAGE>



         On September  11, 1998,  the Company  completed the purchase of Country
Grove Plaza,  a 16,642 square foot strip mall  located in West Palm Beach,
Florida (Palm Beach County),  from an unrelated third party for  $1,100,000.  In
connection  with the purchase,  the Company  obtained a $880,000  first mortgage
loan which  bears  interest  at a rate of 7.51% per annum.  Such first  mortgage
requires monthly  principal and interest payments of $6,159 based upon a 30 year
self liquidating  amortization schedule, with a balloon payment of approximately
$780,150 due September 1, 2008. The strip mall is currently 93% occupied by
local  tenants  subject to  Operating  Leases  ranging from one to 13 years with
various renewal options.

         On July 15, 1998, the Company  completed the purchase of Teeca Plaza, a
22,589 square foot strip mall  located in Boca Raton,  Florida (Palm Beach
County),  from an unrelated third party for  $2,075,000.  In connection with the
purchase,  the Company  obtained a $1,800,000  first  mortgage  loan which bears
interest  at a rate of 7.39% per annum.  Such first  mortgage  requires  monthly
principal and interest payments of $12,450 based upon a 30 year self liquidating
amortization  schedule,  with a balloon payment of approximately  $1,591,000 due
July 1, 2008.  The strip mall is currently  100% occupied by local tenants
subject to Operating  Leases ranging from three to 26 years with various renewal
options.

         On July 7, 1998,  the Company  completed  the sale of its Mountain View
Mall  property  located in Bend,  Oregon (the "Bend  Property")  to an unrelated
third  party  for  approximately  $17,750,000.  The  Company  realized net cash 
proceeds from the sale of approximately $319,200 after paying off the balance of
the underlying first mortgage of $17,065,000  (which  represented  approximately
23% of the Company's  total  liabilities at such time) and used a portion of the
funds for closing  costs and net credits to the buyer.  At the time of the sale,
the Bend Property  represented  approximately  17% of the Company's total assets
with  a  carrying  value,  net of  accumulated  depreciation,  of  approximately
$16,482,000.  As a result  of the  sale,  the  Company  realized  a book gain of
approximately $947,000.

         On April 17, 1998,  the Company  completed  the purchase of Orange Park
Shopping  Center,  a 21,509 square foot strip mall located in Orange Park,
Florida  (Clay  County),  from an  unrelated  third  party  for  $1,500,000.  In
connection with the purchase,  the Company  obtained a $1,300,000 first mortgage
loan which  bears  interest  at a rate of 7.39% per annum.  Such first  mortgage
requires monthly  principal and interest payments of $8,992 based upon a 30 year
self liquidating  amortization schedule, with a balloon payment of approximately
$1,147,600 due April 1, 2008.  The strip mall is currently 90% occupied by
local  tenants  subject to Operating  Leases  ranging from two to six years with
various renewal options.

         On April 1, 1998,  the Company  completed  the purchase of Regency Walk
Shopping  Center,  a 34,436 square foot strip mall located in Jacksonville,
Florida  (Duval  County),  from an  unrelated  third  party for  $2,150,000.  In
connection with the purchase,  the Company  obtained a $1,840,000 first mortgage
loan which  bears  interest  at a rate of 7.87% per annum.  Such first  mortgage
requires monthly principal and interest payments of $13,335 based upon a 30 year
self liquidating  amortization schedule, with a balloon payment of approximately
$1,643,700  due May 1, 2008.  The strip mall is currently  72% occupied by
local tenants  subject to Operating  Leases  ranging from two to nine years with
various renewal options.


                                                        10

<PAGE>



     On February  9, 1998,  a  wraparound  note held by the Company on a 128,864
square foot  shopping  center  property  located in Chili,  New York (the "Chili
Property"),  was assigned to an unrelated third party for $75,000.  The Company,
as the master lessee on a Master Lease on the Chili  Property,  terminated  such
Master Lease on April 30, 1996. The  assignment of the wraparound  note relieved
the  Company  of its  responsibility  to make  any  payments  on the  underlying
mortgage  debt on the  Chili  Property.  As a result  of the  assignment  of the
wraparound note on the Chili Property and the relief of the Company's obligation
to make payment on the underlying  mortgage debt, the Company  realized net cash
proceeds of approximately $75,000 and a book gain of approximately $82,000.

     During 1998, an agreement, (the "SGSC Agreement") was in effect between the
Company  and  certain  of its  affiliates,  on one hand,  and  Societe  Generale
Securities Corporation ("SGSC") on the other hand, pursuant to which the Company
and some affiliates had retained SGSC to act as financial  advisor in connection
with a transaction  involving the sale of a number of shopping center properties
owned by such  affiliates and two retail  properties  owned by the Company.  The
SGSC Agreement was terminated by the Company and certain of its affiliates,  via
written  notice on March 29, 1999.  Pursuant to the terms of the SGSC  Agreement
upon certain  dispositions of the properties covered by the SGSC Agreement prior
to  March  29,  2000,  to  persons  or  entities  to whom  SGSC had  shown  such
properties,  the Company and or such affiliates would be obligated to pay SGSC a
fee based on the sales price of such properties.

         From  time to time  the  Company  sells,  or may take  action  to sell,
certain  real  estate  assets  which it does not  believe to be  material to the
overall business or financial condition of the Company.

Effects of Settlement

         As a result of, and in connection  with,  the settlement of the Winston
Actions,  the Company expects to disburse cash of  approximately  $10.5 million,
including  payments  of the  settlement  consideration  to  Series  A  Preferred
Stockholders,  fees  of the  plaintiff's  and  defendant's  lawyers,  court  and
Securities  and  Exchange  Commission  filing  fees,  printing  costs  and other
expenses.  Although  the  expected  expenditures  of  such  funds  represents  a
substantial amount of the Company's cash reserves,  the Company believes that it
would have  sufficient  cash to continue  operating  in the  ordinary  course of
business.  The Company,  however,  is considering  whether to, and ways it could
raise cash to make additional investments in suitable real estate properties. If
the Company determines to raise additional funds, it may decide to do so through
a public or private  sale of debt or equity  securities,  by  conducting  rights
offerings,  by selling or  realizing on assets  (including,  but not limited to,
sales of its  properties  and  interest  in the Wrap  Debt),  through  corporate
borrowings,  or by other means.  The Company does not  currently  have any plans
with respect to, and may never decide to do, any of the foregoing.  In addition,
the  Company  has no current  understandings  or  arrangements  with  respect to
purchasing additional properties.

         See Item 3. Legal  Proceedings for a description of the settlement of a
purported  class  action and  derivative  lawsuit  and see Item 7.  Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operations,
Liquidity  and Capital  Resources  for a  description  of the  potential  rights
offering.

Investment Policy


                                                        11

<PAGE>

         There are no  limitations  on the  percentage  of  assets  which may be
invested in any one  investment  or on the type of  investments  the Company may
make.  The Company has no present  intention of  investing  in or acquiring  the
securities of other  companies for the purpose of exercising  control over other
companies.  The Company does not  currently  intend to expand its  operations to
include non-real estate related activities, but may do so if the Company's Board
of  Directors  determines  it to be in the best  interest  of the  Company.  The
Company's  policies  towards its  investments are not subject to the vote of the
Company's stockholders.

Real Estate Revenue

         For the years ended December 31, 1998,  1997 and 1996, no tenant at any
individual  property accounted for more than 10% of the Company's total revenue.
However,  the total  revenue  from K- Mart  Corporation's  nine  leases with the
Company  accounted  for  approximately  29%, 32% and 30%,  respectively,  of the
Company's aggregate rent revenue.

Potential Environmental Risks

         Under various federal,  state and local environmental laws,  ordinances
and regulations, the Company, as a current or previous owner or operator of real
property,  may be held liable for the costs of removal or remediation of certain
hazardous    or    toxic    substances,    including,    without    limitations,
asbestos-containing  materials,  that  could be  located  on,  in or under  such
property.  Such laws and regulations  often impose liability  whether or not the
owner or operator knew of, or was responsible for, the presence of the hazardous
or toxic substances.  The costs of any required  remediation or removal of these
substances  could be  substantial  and the  Company's  liability  as an owner or
operator  as to any  property  is  generally  not  limited  under  such laws and
regulations,  and could exceed the property's value and the Company's  aggregate
assets.  The Company's ability to sell or rent a property,  or to borrow using a
property  as  collateral  may be  adversely  affected  by the  presence of these
substances or failure to remediate such  substances  properly.  Under these laws
and regulations,  the Company, as an owner, operator, or any entity who arranges
for the disposal of hazardous or toxic substances,  such as  asbestos-containing
materials,  at a disposal site,  may also be liable for these costs,  as well as
certain  other costs,  including  governmental  fines and injuries to persons or
properties.  To date,  the  Company,  has not  incurred  any costs of removal or
remediation of such hazardous or toxic substances.  However, the presence,  with
or without the  Company's  knowledge,  of hazardous or toxic  substances  at any
property held or operated by the Company,  could adversely  affect the Company's
business, operating results and financial condition. The Company is not aware of
any  environmental  conditions at any of the properties that it owns or in which
it has an investment.



                                                        13

<PAGE>



Competition

         Any rental property that the Company currently owns or that the Company
purchases in the future (whether retail, office,  industrial or residential) may
have competition from similar  properties in the vicinity in which such property
is located,  some which may be substantial.  Such  competition will generally be
for the  retention of existing  tenants and for new tenants upon space  becoming
vacant. The Company believes that the profitability of each of its properties is
based, in part, upon such properties'  geographic  location,  the operations and
identity of the property's tenants,  the performance of the property and leasing
managers,  the maintenance and appearance of the property, the ease of access to
the property and the adequacy of property related  facilities.  The Company also
believes that general economic circumstances and trends may affect the operation
and competitiveness of the property.

         Numerous other  developers,  managers and owners of real estate compete
with the Company for  management  and leasing  revenues,  land for  development,
properties for acquisition  and tenants for  properties,  many of which may have
greater  financial and other  resources  than the Company and may have operating
development experience greater than the Company's. In addition, retailers at the
operating  properties face increasing  competition from outlet malls, mail order
catalogues,  discount shopping clubs, direct mail and telemarketing  operations.
The  development  of competing  properties  and  renovations  and  expansions of
existing competing properties could negatively affect the Company by encouraging
shoppers to make their purchases at the newer,  expanded or renovated  competing
center,  attracting  more  popular  tenants  or  luring  tenants  away  from the
competing  operating  property.   Increased  competition  could  materially  and
adversely affect the Company's revenues.

Employees

         The Company currently employs 23 people, five of whom are officers. The
Company is party to a management  agreement (the  "Management  Agreement")  with
Concord pursuant to which the Company provides management  services,  assists in
the management of Concord  properties and provides certain  personnel and office
space and general office services to Concord and for which the Company  receives
reimbursements  from Concord.  The Management  Agreement is renewable  annually.
Except for services  provided by certain  employees  to Concord  pursuant to the
Management Agreement,  all of the employees are employed on a full time basis to
provide services to the Company.

Impact of Year 2000

         See Item 7. Management's Discussion and Analysis of Financial Condition
and  Results  of  Operations  for a  description  of  the  Company's  Year  2000
compliance programs and information systems modifications.



                                                        14

<PAGE>



Item 2.        Description of Property.

         The  Company's  executive  offices are located at 150 E.  Palmetto Park
Road, 4th Floor, Boca Raton, Florida,  33432 where it leases approximately 8,000
square feet of office space.

         The Company is engaged in the  ownership and operation of 35 commercial
real estate  properties  consisting  of shopping  centers,  strip malls and free
standing  department stores. The following tables describe and summarize certain
data for each such  property.  See also Item 1.  Business,  for a description of
additional  terms  relating  to the  Properties  and  the  Company's  investment
policies.

         Table 1.    Summary of Properties and Underlying Debt.

         Table 2.    Summary of Wraparound Notes.



                                                        15

<PAGE>



Table 1. Summary of Properties and Underlying Debt
<TABLE>
<CAPTION>


                                                                                                        Monthly      
                                                                            Underlying   Interest     Payments of    
                                                      GLA      Occupancy      Debt at      Rate       Principal &    
Location             Property                       (Sq Ft)     Rate (%)     12/31/98       (%)        Interest      
===================  ============================  =========  ============ ============= ========= ================= 
<S>                                                   <C>              <C>   <C>             <C>           <C>       
Deland, FL           Deland Plaza   (1), (6)          68,337           100   $   837,341     8.875         $  14,016 
Rochester, NY        Ridgemont Plaza   (1), (6)       84,181           100     1,067,839     9.250            15,992 
Pascagoula, MS       Gulf Coast Plaza   (4)          125,803            79             0       n/a               n/a 
Janesville, WI       Blackhawk Village (4)            88,500            86       907,113      9.00            14,060 
                                                                                 110,151      9.00             1,529 
Marietta, OH         Kmart Corporation   (1), (6)     87,543           100     1,900,000    5.75 -               (3) 
                                                                                              6.70                   
Mt. Pleasant, PA     Kmart Corporation   (1), (6)     83,552           100     1,275,000    6.50 -               (3) 
                                                                                              6.80                   
No. Canton, OH       Kmart Corporation   (1), (6)     84,181           100     2,048,714      9.00            21,669 
Owensboro, KY        Kmart Corporation   (1), (6)     68,337           100     1,520,000    6.50 -               (3) 
                                                                                              6.80                   
Quincy, IL           Harrison Street Plaza   (4)     149,954            99     2,910,061      7.75            27,912 
Natchez, MS          Morgantown Plaza (4)             92,646           100     2,190,454      7.59            15,519 
                                                                                                                     
Streetsboro, OH      Kmart Corporation    (1), (6)    84,800           100     1,285,000    6.35 -               (3) 
                                                                                              6.70                   
Dubois, PA           Sandy Plaza   (1), (4)           34,019           100     1,395,000      7.00               (3) 
                                                                                                                     
Franklin Township,   Franklin Plaza   (1), (4)        31,170           100     1,385,000      6.00               (3) 
PA                                                                                                                   
Clarksville, TN      Kmart Corporation   (1), (6)     88,100           100     1,450,000    6.00 -               (3) 
                                                                                              6.80                   
Montgomery, AL       Chisolm Shopping Center (4)      39,075           100     1,212,842      8.75            14,500 
Paris, TN            Paris Plaza (4)                 102,453            98       562,491     13.50             8,859 
                                                                                 355,949      9.25             8,467 
Savannah, TN         Savannah Plaza (4)               46,400           100       273,224      9.50             6,612 
-------------------  ----------------------------  ---------  ------------ ------------- --------- ----------------- 
</TABLE>


Table continues and footnotes appear on the following page.
                                                            16

<PAGE>
<TABLE>
<CAPTION>
                                                                   Balance at    
                                                                    Maturity     
                                                    Maturity      (Assuming no   
Location            Prepayment Provision              Date        Prepayment)    
=================== ============================== ===========  ================ 
<S>                 <C>                                 <C>            <C>       
Deland, FL          1% premium                          4/1/03         $ 343,437 
Rochester, NY       1% premium                          1/1/02           747,266 
Pascagoula, MS      n/a                                    n/a               n/a 
Janesville, WI      none                               7/31/02           540,492 
                    none                                8/1/07                 0 
Marietta, OH        None until 2002; then 3%           3/15/07                 0 
                    declining 1% annually to par                                 
Mt. Pleasant, PA    None until 2001; then 3%            5/1/07            76,197 
                    declining 1% annually to par                                 
No. Canton, OH      Pre-payable at a discount          9/30/12                 0 
Owensboro, KY       None until 2001; then 3%           12/1/07                 0 
                    declining 1% annually to par                                 
Quincy, IL          Pre-payable at par                  7/1/98         2,992,016 
Natchez, MS         None until 2004; then 1%            5/1/08         1,951,900 
                    premium                                                      
Streetsboro, OH     None until 2001; then 3%           12/1/06                 0 
                    declining 1% annually to par                                 
Dubois, PA          None until 2004; then 3%           12/1/06                 0 
                    declining 1% annually                                        
Franklin Township,  None until 2004; then 3%          12/15/07                 0 
PA                  declining 1% annually                                        
Clarksville, TN     None until 2002; then 3%           10/1/06                 0 
                    declining 0.5% annually to par                               
Montgomery, AL      2% premium                          4/1/07           396,073 
Paris, TN           1% premium                          4/1/08                 0 
                    Pre-payable at par                  7/1/03                 0 
Savannah, TN        none                               1/31/03                 0 
                    ------------------------------ -----------  ---------------- 
</TABLE>
Table continues and footnotes appear on the following page.

<PAGE>                    

Table 1.  Summary of Properties and Underlying Debt - continued
<TABLE>
<CAPTION>

                                                                                                        Monthly      
                                                                            Underlying   Interest     Payments of    
                                                      GLA      Occupancy      Debt at      Rate       Principal &    
Location             Property                       (Sq Ft)     Rate (%)     12/31/98       (%)        Interest      
===================  ============================  =========  ============ ============= ========= ================= 
<S>                                                   <C>              <C>       <C>         <C>               <C>   
Danville, IL         Holiday Square (4)               50,978           100       402,275     9.625             9,663 
Warsaw, VA           Richmond Plaza   (1), (6)        43,200           100       786,975    13.125            11,373 
                                                                                                                     
Southwick, MA        Greenwood Plaza   (1), (6)       45,000           100       763,629     11.50  9,857 in advance 
Walpole, NH          Kendiana Plaza   (1) , (6)       32,400           100       763,629     11.50  9,857 in advance 
Baton Rouge, LA      Capitol Heights (4)              52,700           100     1,902,433     12.00            33,583 
Sunrise, FL          Pine Oak Plaza   (2), (5)        16,994           100     1,155,466      7.48             8,095 
Jacksonville, FL     Regency Walk   (2), (5)          34,436            92     1,832,595      7.87            13,335 
Orange Park, FL      Orange Park   (2), (5)           21,509            95     1,294,056      7.39             8,992 
Boca Raton, FL       Teeca Plaza   (2), (5)           22,589            97     1,795,235      7.39            12,450 
W. Palm Beach, FL    Country Grove Plaza   (2), (5)   16,642            96       878,877      7.51             6,159 
Jacksonville, FL     Mandarin Central   (2), (5)      63,346            99     3,947,350      8.00            28,984 
Ft. Lauderdale, FL   Pine Crest   (2), (5)            40,408            97     2,398,033      7.00            15,967 
Davie, FL            Lincoln Park   (2), (5)          46,190            97     3,219,000      7.58            22,684 
Palatka, FL          Walmart Corporation   (1), (6)   91,840           100     1,129,963     12.00            17,247 
Columbus, NE         Cottonwood Plaza   (1), (6)      64,890           100     1,316,675     12.00            17,201 
                                                                                  61,528      9.50               697 
Hamilton, NY         Alexander Plaza   (1), (6)       43,200           100       792,415    13.125            11,373 
                                                                                                                     
Zanesville, OH       Sunrise Shopping Center  (2),   130,072            55       850,193      9.50            14,295 
                     (4)
Blackstone, VA       Family Dollar (2), (4)           43,200            21             0       n/a               n/a 
-------------------  ----------------------------  ---------  ------------ ------------- --------- ----------------- 
</TABLE>

Table continues and footnotes appear on the following page.
 
<PAGE>
<TABLE>
<CAPTION>
                                                                   Balance at   
                                                                    Maturity    
                                                    Maturity      (Assuming no  
Location            Prepayment Provision              Date        Prepayment)   
=================== ============================== ===========  ================
<S>                                                     <C>               <C>    
Danville, IL        1% premium                          9/1/02            64,250 
Warsaw, VA          4% in 1999, declining 1%           10/1/09                 0 
                    annually to a 2% minimum                                     
Southwick, MA       1% premium                          9/1/09                 0 
Walpole, NH         1% premium                          9/1/09                 0 
Baton Rouge, LA     2% premium                         12/1/05                 0 
Sunrise, FL         none                                5/1/08         1,027,700 
Jacksonville, FL    none                                5/1/08         1,643,700 
Orange Park, FL     none                                4/1/08         1,147,600 
Boca Raton, FL      none                                7/1/08         1,591,000 
W. Palm Beach, FL   none                                9/1/08           780,150 
Jacksonville, FL    none                               10/1/08         3,542,000 
Ft. Lauderdale, FL  none                              11/11/08         2,063,000 
Davie, FL           5% premium                         11/1/08         2,854,000 
Palatka, FL         2% premium                         11/1/07                 0 
Columbus, NE        none                                9/1/10             9,274 
                    none                                7/1/11                 0 
Hamilton, NY        5% in 1999 declining 1%            12/1/09                 0 
                    annually to a 2% minimum                                     
Zanesville, OH      none                               5/31/99         1,170,645 
                                                                                 
Blackstone, VA      n/a                                    n/a               n/a 
------------------- ------------------------------ -----------  ---------------- 
</TABLE>
                    
(1)      Annual real estate taxes are the responsibility of the tenant.         
(2)      Represents a Fee Property.                                             
(3)      Principal and interest are paid semi annually in accordance with the
         respective bond documents.           
(4)     Represents a shopping center.
(5)     Represents a strip mall.     
(6)     Represents a free standing department store.
                                     

<PAGE>



Table 2. Summary of Wraparound Notes at December 31, 1998
<TABLE>
<CAPTION>

                                Carrying                          Annual                         Balance at   
                   Interest     Amount of     Face Amount       Payments of        Final          Maturity    
                     Rate      Wraparound    of Wraparound      Principal &      Maturity       (Assuming no  
    Location         (%)          Notes          Notes           Interest          Date         Prepayment)   
================= ==========  ============= ================ ================= =============  ================
<S>                     <C>    <C>             <C>                 <C>              <C>          <C>          
Deland, FL              9.70   $  1,400,000    $   1,917,696       $   207,550      12/31/99     $   1,890,301
Rochester, NY           9.70      1,469,375        1,750,529           220,906      12/31/14                 0
                       10.00        130,625          183,567                 0      12/31/14           910,735
Pascagoula, MS          9.75      1,190,217        2,035,284           246,507      12/31/16                 0
                       12.00        175,125          187,335            23,759      12/31/16           187,335
                       11.00         34,658           39,742                 0      12/31/16           285,255
                       11.00         68,428           72,328                 0      12/31/16           519,150
Janesville, WI         10.25      1,400,001        2,138,975           268,502      12/31/15                 0
                       11.00         15,000           16,584                 0      12/31/15           106,688
Marietta, OH            8.32      2,894,642        3,101,392           371,533      12/31/14                 0
                       11.00         20,000           28,548                 0      12/31/14           160,313
Mt Pleasant, PA         9.18      2,287,405        2,498,786           290,345      12/31/15                 0
                       11.00         12,626           14,478                 0      12/31/14            83,481
No Canton, OH           9.11      2,146,933        2,813,466           333,272      12/31/14                 0
                       11.00         26,575           37,589                 0      12/31/14           216,478
                       11.00         25,650           32,385                 0      12/31/14           186,725
Owensboro, KY          10.00      2,738,751        2,739,304           337,955      13/31/15                 0
                       11.00         25,410           27,217                 0      12/31/15           175,092
Quincy, IL             10.00      1,885,774        5,633,307           920,890      12/31/98         4,904,387
Natchez, MS            10.00      1,228,505        3,479,370           516,210      05/01/08         3,097,127
Streetsboro, OH         9.68      1,748,954        2,254,317           276,986      12/31/14                 0
                       11.00         21,447           29,643                 0      12/31/14           176,200
                       11.00         19,600           24,746                 0      12/01/14           142,686
                       11.00         10,000           11,345                 0      12/01/14            65,418
Sandy, PA              10.00      1,164,620        2,740,202           475,498      12/31/99         1,996,828
Franklin, PA           10.00      1,164,620        2,740,202           475,498      12/31/99         1,996,828
Clarksville, TN         9.75      1,326,879        3,379,184           554,822      12/31/99         2,497,383
Montgomery,             9.75        875,000        2,185,302           295,516      12/31/99         2,032,563
AL
Savannah, TN            9.88        430,001        1,157,445           197,500      12/31/99           993,627
Danville, IL            9.75        800,001        1,764,370           275,730      12/31/99         1,562,991
Warsaw, VA              9.75      1,017,030        1,373,947           175,974      12/31/99         1,298,565
Southwick, MA           9.75        816,275        1,368,587           196,750      12/31/99         1,248,385
Paris, TN              10.00      1,347,733        3,160,401           555,860      12/31/99         2,686,998
                       11.00         51,016           74,163                 0      12/31/99            80,814
Walpole, NH             9.75        954,564        1,368,587           196,750      12/31/99         1,248,385
Baton Rouge,            9.75      3,832,052        4,294,990           630,350      12/31/99         3,890,656
LA
Palatka, FL             9.75      1,607,290        2,288,453           407,745      12/31/99         1,921,922
                       11.00         24,650           27,687                 0      12/31/99            30,891

Columbus, NE            9.75      2,111,331        2,376,262           309,207      12/31/99         2,235,677
Hamilton, NY            9.75      1,031,024        1,435,266           210,745      12/31/99         1,300,000
----------------- ----------  ------------- ---------------- ----------------- -------------  ----------------
</TABLE>
                                                               19
Table continues the following page.

<PAGE>
<TABLE>
<CAPTION>
                        Annual                    
                        Master         Master     
                         Lease         Lease      
    Location            Payment     Termination   
=================    ============= ============== 
<S>                    <C>               <C>   
Deland, FL             $   207,550       12/31/99 
Rochester, NY              220,906       12/31/14 
                                 0            n/a 
Pascagoula, MS             270,266       12/31/17 
                                 0            n/a 
                                 0            n/a 
                                 0            n/a 
Janesville, WI             268,502       12/31/15 
                                 0            n/a 
Marietta, OH               371,533       12/31/14 
                                 0            n/a 
Mt Pleasant, PA            290,345       12/31/15 
                                 0            n/a 
No Canton, OH              333,272       12/31/14 
                                 0            n/a 
                                 0            n/a 
Owensboro, KY              337,955       12/31/15 
                                 0            n/a 
Quincy, IL                 920,890       12/31/98 
Natchez, MS                516,210       12/31/98 
Streetsboro, OH            276,986       12/31/14 
                                 0            n/a 
                                 0            n/a 
                                 0            n/a 
Sandy, PA                  475,498       12/31/99 
Franklin, PA               475,498       12/31/99 
Clarksville, TN            554,822       12/31/99 
Montgomery,                295,516       12/31/99 
AL                                                
Savannah, TN               197,500       12/31/99 
Danville, IL               275,730       12/31/99 
Warsaw, VA                 175,974       12/31/99 
Southwick, MA              196,750       12/31/99 
Paris, TN                  555,860       12/31/99 
                                 0            n/a 
Walpole, NH                196,750       12/31/99 
Baton Rouge,               630,350       12/31/99 
LA                                                
Palatka, FL                407,745       12/31/99 
                                 0            n/a 
                                                  
Columbus, NE               309,207       12/31/99 
Hamilton, NY               210,745       12/31/99 
-----------------    ------------- -------------- 
</TABLE>
                   
<PAGE>

Item 3.        Legal Proceedings.

         During 1996 Milestone, certain past and present members of its Board of
Directors,  executive  officers,  and  Concord  were  named as  defendants  in a
purported class action and derivative lawsuit (the "Winston Actions")  commenced
in the Court of Chancery of the State of Delaware (the "Delaware Court"). In the
actions, the plaintiff, a Series A Preferred Stockholder purporting to bring the
action on behalf of  himself,  all other  Series A  Preferred  Stockholders  and
derivatively  on  behalf  of  Milestone,  alleged  that in  connection  with the
Acquisition and certain related transactions (collectively, the "Transactions"),
Milestone and its directors engaged in self-dealing, violated federal securities
laws and an injunction  against such  violations  and breached  their  fiduciary
duties to the Series A Preferred  Stockholders.  The  plaintiff  claimed,  among
other things,  that, as a result of the  Transactions,  Milestone would not have
sufficient  funds to pay dividends on the Series A Preferred  Stock and that the
properties  which  were not  transferred  to UPI in the  Transfer  were  grossly
inferior to the properties that were transferred to UPI.

         On August 5, 1998,  the counsel for the named  plaintiff in the Winston
Actions  and the counsel  for the  defendants  entered  into a  Stipulation  and
Agreement of Settlement (the "Winston Settlement  Agreement") which memorialized
the terms of a settlement (the "Winston  Settlement") of the Winston Actions. On
January 28, 1999, the Delaware Court approved the Winston Settlement  Agreement,
which  approval  became final  effective as of the close of business on March 5,
1999.  At such time,  (i) the shares of Series A  Preferred  Stock owned by each
Series A Preferred  Stockholder  who was eligible to  participate in the Winston
Settlement  and who did not properly opt out of the Winston  Settlement  and who
owned shares of Series A Preferred Stock as of the close of business on March 5,
1999 were  canceled  and  represented  only the right of such Series A Preferred
Stockholder  to receive $3.00 in cash from the Company in exchange for each such
share;  (ii) the  holders  of shares of the  Series A  Preferred  Stock  between
October 23, 1995 and the close of business on March 5, 1999, other than Series A
Preferred  Stockholders  who  properly  opted  out  of  the  Winston  Settlement
Agreement or who were precluded from  participating  in the Winston  Settlement,
released  any and all claims they may have had against the Company and the other
named  defendants  in  connection  with  the  Transactions;   (iii)  Milestone's
stockholders  other than Series A Preferred  Stockholders  who were  eligible to
participate in the Winston  Settlement and who properly opted out of the Winston
Settlement  released all derivative  claims in connection with the Transactions;
and (iv) the Winston  Actions were  dismissed.  In  connection  with the Winston
Actions,  the Company  retained  counsel for all of the  defendants  (including,
without  limitation,  Leonard S.  Mandor,  Robert A.  Mandor,  Harvey  Jacobson,
Gregory McMahon and Geoffrey Aaronson (each of whom is a director and/or officer
of the  Company)) and assumed  responsibility  for the payment of all legal fees
incurred by such persons in connection  with the Winston Actions and the Winston
Settlement (subject to the insurance coverage litigation described below).

     The  foregoing  description  of the  Winston  Settlement  and  the  Winston
Settlement Agreement
                                                        20

<PAGE>



is qualified in its entirety by reference to the Winston Settlement Agreement, a
copy of which was filed by the Company with the Commission on August 14, 1998 as
Exhibit 10.01 to Quarterly  Report on Form 10-Q for the  quarterly  period ended
June 30, 1998.

         The Company  maintains a directors  and officers  insurance and company
reimbursement  policy (the  "National  Policy")  issued by  National  Union Fire
Insurance Company of Pittsburgh,  PA ("National  Union") with a $2,000,000 limit
and an excess directors and officers liability and company  reimbursement policy
(the "Stonewall  Policy") issued by Stonewall  Surplus Lines Insurance  Company,
now known as American  Dynasty  Surplus Lines Insurance  Company  ("Stonewall"),
with a $2,000,000  limit.  The Company  believes that the amounts that it has to
pay  pursuant  to the  Winston  Settlement  and in  connection  with the Winston
Actions  are  covered  losses  under  both the  National  Union  Policy  and the
Stonewall  Policy.  In addition,  the Company  believes  that the legal fees and
other  expenses  incurred by the Company and the other  defendants in connection
with the Winston Actions are also covered losses under the National Union Policy
and the Stonewall Policy.  In connection with a previous proposed  settlement of
the Winston  Actions which was never  consummated,  National Union and Stonewall
both refused to  contribute  to such proposed  settlement,  asserting  that such
proposed  settlement  did not  encompass  any  covered  loss (as  defined in the
National Policy and the Stonewall  Policy,  respectively).  On January 29, 1998,
the Company  commenced  a lawsuit in the United  States  District  Court for the
Southern District of New York against National Union and Stonewall in connection
with such refusal to contribute to such proposed  settlement.  In the complaint,
the plaintiffs  alleged that National Union and Stonewall  wrongfully  failed to
contribute to the proposed  settlement  and sought  reimbursement  from National
Union and  Stonewall  up to the limits of their  respective  policies.  National
Union and  Stonewall  both answered the  complaint  and denied  liability.  As a
result of the termination of the previously proposed settlement,  the Company on
one hand, and Stonewall and National Union, on the other hand, agreed to dismiss
such action  without  prejudice and such action was dismissed on May 29, 1998 by
the United  States  District  Court for the Southern  District of New York.  The
Company gave both National Union and Stonewall notice of the Winston  Settlement
and  provided  each of them with a copy of the Winston  Settlement  Agreement on
August 12, 1998.  National Union and Stonewall  reviewed the Winston  Settlement
Agreement and separately informed the Company that their basic position, denying
coverage, had not changed. On February 12, 1999, the Company commenced a lawsuit
in the Circuit  Court for the Fifteenth  Judicial  Circuit in and for Palm Beach
County, Florida against both National Union and Stonewall alleging,  among other
things,  that National Union and Stonewall have wrongfully refused to contribute
to the Winston  Settlement and seeking  reimbursement  from National Union
and  Stonewall  up to the  limits  of their  respective  policies.  The  initial
complaint in the new lawsuit was served on each of National  Union and Stonewall
on  February  12,  1999  and on March  17,  1999 the  Company  filed an  amended
complaint,  which, among other things, added the other defendants to the Winston
Actions as plaintiffs. National Union and Stonewall have until March 29, 1999 to
answer the amended  complaint.  In connection with this action,  the Company has
retained  counsel for all of the plaintiffs and is assuming  responsibility  for
the payment of all legal fees incurred by such persons in  connection  with this
action.  At this time,  the Company is not in a position to render an opinion as
to the outcome of this action.

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

     No matters were  submitted to a vote of the security  holders,  through the
solicitation of
                                                        21

<PAGE>



proxies  or  otherwise,  during the  fourth  quarter  of the  fiscal  year ended
December 31, 1998.

                                                      PART II

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

         The Common  Stock and the Series A  Preferred  Stock  traded on the New
York  Stock   Exchange   (the  "NYSE")   under  symbols  "MPI"  and  "MPI  PRA",
respectively,  from January 29, 1991 through  July 3, 1998.  The NYSE  suspended
trading in shares of the Common Stock and Series A Preferred  Stock prior to the
market  opening on July 6, 1998 because it had  determined  that  Milestone  had
fallen below certain of the NYSE's continued  listing  criteria  relating to net
income and market value of publicly held shares of the Common Stock and Series A
Preferred Stock. The Company has learned that on or about July 6, 1998, a market
began to be made for shares of the Common Stock and Series A Preferred  Stock on
the Over-The-Counter (the "OTC") Bulletin Board with the ticker symbols"MPRP"and
"MPRPP",  respectively.  The NYSE  subsequently  applied to the  Securities  and
Exchange  Commission (the  "Commission") to delist the Common Stock and Series A
Preferred  Stock and, on September  10,  1998,  the  Commission  issued an order
granting  the  NYSE's  application  to delist  the  Common  Stock  and  Series A
Preferred Stock. Effective as of the opening of the trading session on September
11, 1998, the Common Stock and Series A Preferred  Stock were de-listed from the
NYSE.

         The  following  tables set forth the high and low sales  prices for the
Common Stock and the Series A Preferred Stock, as reported on the NYSE, for each
quarterly  period for the 1997 fiscal year and the 1998 fiscal year  (January 1,
1998 through July 3, 1998). In addition,  the table also sets forth the high and
low bid  quotations  for the Common Stock and the Series A Preferred  Stock,  as
reported on the OTC  Bulletin  Board,  for the period from July 6, 1998  through
December  31,  1998.  The high and low bid  quotations  for the Common Stock and
Series A Preferred Stock  represent  prices between  broker-dealers,  and do not
include retail mark-ups or mark-downs or any commission to the broker-dealer and
may not represent actual transactions.
<TABLE>
<CAPTION>

Common Stock                                                                     High            Low
======================================================================= =============  =============
1998
<S>                                                                          <C>                 <C>
First Quarter                                                           $    1- 13/16    $       5/8
Second Quarter                                                               1- 13/16          11/16
Third Quarter
     NYSE (July 1, 1998 through July 3, 1998)                                     3/4          11/16
     OTC Bulletin Board (July 6, 1998 through September 30, 1998)              1- 1/2           7/16
Fourth Quarter                                                                    7/8            3/4
1997
First Quarter                                                                     7/8           9/16
Second Quarter                                                                   9/16           7/16
Third Quarter                                                                    9/16           7/16
Fourth Quarter                                                                  11/16            1/2

</TABLE>
<TABLE>
<CAPTION>


Series A Preferred Stock                                                          High            Low
======================================================================= ==============  =============
1998
<S>                                                                             <C>           <C>     
First Quarter                                                             $     1- 3/4    $    1- 1/4
Second Quarter                                                                  1- 3/8        1- 5/16
Third Quarter
     NYSE (July 1, 1998 through July 3, 1998)                                   1- 1/2        1- 7/16
     OTC Bulletin Board (July 6, 1998 through September 30, 1998)               2- 1/2            7/8
Fourth Quarter                                                                  2- 1/2              2
1997
----
First Quarter                                                                      7/8            5/8
Second Quarter                                                                   11/16            1/2
Third Quarter                                                                 1-  5/16           7/16
Fourth Quarter                                                                1-  5/16       1-  3/16
</TABLE>
<PAGE>
         On March 12, 1999,  the average bid and asked price of the Common Stock
was $1.25 and the average  bid and asked  price of the Series A Preferred  Stock
was $2.82. On March 12, 1999, there were  approximately  1,853 record holders of
the Common Stock and six record holders of the Series A Preferred Stock.

         At the close of  business  on March 5,  1999,  Milestone  canceled  and
retired 2,983,284 shares of Series A Preferred Stock, representing more than 99%
of the then  outstanding  shares of Series A  Preferred  Stock,  pursuant to the
terms of the Winston Settlement. See Item 3. Legal Proceedings for a description
of the Winston Settlement.

Dividend Policy

         Common Stock

         Milestone has never declared any cash dividends on its Common Stock and
has no present intention to declare or pay cash dividends on the Common Stock in
the foreseeable  future.  While there are no restrictions on Milestone's ability
to declare dividends,  except for the preference of the Series A Preferred Stock
(discussed below),  the Company  anticipates that in the future earnings will be
retained  to finance the  Company's  operations.  Any  decision as to the future
declaration  of  dividends  on the Common  Stock will  depend on the  results of
operations and the financial  condition of the Company and such other factors as
Milestone's Board of Directors,  in its discretion,  deems relevant. See Item 7.
Management's Discussion and Analysis of Financial Condition and Results
of Operation - Liquidity and Capital Resources.

                                                        24

<PAGE>

         Series A Preferred Stock

         Milestone's Board of Directors  determined not to declare any dividends
on the Series A Preferred  Stock during the years ended December 31, 1998,  1997
and 1996.  The last  dividend  declared by Milestone  was for the quarter  ended
December  31,  1995 and was paid on  February  15,  1996 at $0.195  per share of
Series A Preferred Stock.

         Since September 30, 1995,  holders of the Series A Preferred Stock have
not been entitled to receive  dividends on a cumulative  basis.  Pursuant to the
Certificate of Designations of the Series A Preferred Stock, after such date, no
cash dividend may be paid on the Common Stock unless full dividends of $0.195 on
all  outstanding  shares  of  Series A  Preferred  Stock  for the  then  current
quarterly  dividend  period are declared and either paid or sufficient  sums for
the payment thereof are set apart. As a result of Milestone's  Board  Directors'
determination  not to declare a dividend  for the quarter  ended June 30,  1997,
which was the sixth consecutive quarter for which no dividend was declared,  the
number  of  persons  entitled  to serve as  directors  on  Milestone's  Board of
Directors  has been  increased by one, and the holders of the Series A Preferred
Stock, who are otherwise entitled to elect one member of the Board of Directors,
became  entitled to elect a second member of the Board of Directors to fill such
newly created  directorship.  Any decision as to the future payment of dividends
on the Series A Preferred Stock will depend on the results of operations and the
financial  condition of the Company and such other factors as Milestone's  Board
of  Directors,  in its  discretion,  deems  relevant.  See Item 7.  Management's
Discussion  and  Analysis of  Financial  Condition  and  Results of  Operation -
Liquidity and Capital Resources.


Item 6.        Selected Financial Data.        


   (Amounts in thousands, except per share information)
<TABLE>
<CAPTION>

                                                             1998          1997           1996          1995           1994
================================================== ============== =============  ============= =============  =============
<S>                                                      <C>           <C>            <C>           <C>            <C>     
Total revenues                                           $ 25,515      $ 30,092       $ 33,722      $ 25,768       $ 19,404
Total expenses                                             32,693        34,244         35,843        26,261         16,951
Loss before income taxes                                  (7,178)       (4,152)        (2,121)         (493)          2,453
Provision (benefit) for income taxes                        1,253         (721)            366           317          1,161
Net (loss) income                                         (8,431)       (3,431)        (2,487)         (810)          1,292
Distributions on preferred stock                               0             0              0        (2,732)        (2,772)
                                                     ------------    ----------    -----------      --------       --------
Loss attributable to common stockholders                $ (8,431)     $ (3,431)      $ (2,487)     $ (3,542)      $ (1,480)
                                                        =========     =========      =========     =========      =========
Loss per common share                                    $ (1.99)    $   (0.82)     $   (0.65)    $   (2.13)     $   (1.28)
                                                         ========    ==========     ==========    ==========     ==========
Weighted average common shares outstanding                 4,235         4,207          3,846         1,665          1,160
                                                        =========     =========      =========     =========      ========
Total assets                                             $ 86,922     $ 112,223      $ 182,095     $ 198,413      $ 137,785
                                                         ========     =========      =========     =========      =========
Mortgages and notes payable                              $ 47,977    $   67,740     $   71,563    $   79,278     $   47,105
                                                         ========    ==========     ==========    ==========     ==========
-------------------------------------------------- -------------- -------------  ------------- -------------  -------------
</TABLE>



                                                         25

<PAGE>



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

         Certain statements made in this report may constitute  "forward-looking
statements"  within the meaning of Section 27A of the Securities Act and Section
21E of the Exchange Act. See Item 1.
Business.

         The following  discussion  and analysis  should be read in  conjunction
with the Consolidated  Financial Statements of the Company and the notes thereto
appearing in Item 14 of this report.

         The Company is engaged in the business of owning, acquiring,  managing,
developing  and  investing  in  commercial  real estate and real estate  related
assets.

Recent Developments

         The settlement of the Winston Actions became  effective at the close of
business  on March 5, 1999.  At such time,  pursuant to the terms of the Winston
Settlement,  Milestone  canceled  and  retired  2,983,284  shares  of  Series  A
Preferred Stock,  representing  more than 99% of the then outstanding  shares of
Series A Preferred Stock. See Item 3. Legal Proceedings for a description of the
Winston Settlement and Liquidity and Capital Resources within this section for a
discussion of the costs associated with the Winston Settlement.

         Effective  as of the opening of the trading  session on  September  10,
1998, the Common Stock and Series A Preferred Stock were delisted from the NYSE.
See Item 5.  Market  for  Registrant's  Common  Stock  and  Related  Stockholder
Matters.

Acquisition and Disposition of Real Estate and Real Estate Related Assets

         During 1998, the Company purchased, as fee owner, seven commercial real
estate properties located in the state of Florida for approximately  $18,500,000
(the  "Purchases").  In  connection  with the  Purchases,  the Company  obtained
approximately  $15,400,000  of first mortgage loans which bear interest at rates
ranging from 7.0% to 8.0%.  The properties  acquired in the Purchases  represent
approximately 56% of the GLA of the Fee Properties.

     During 1998,  approximately  $14,800,000  of  wraparound  notes held by the
Company were  satisfied  as a result of the sales(the "Sales") of the underlying
properties  by their  owners  which are  affiliates  of the  Company  (i.e.  the
Partnerships which owned the underlying  properties).  As a result of the Sales,
the  Company  was  no  longer  obligated  to  make  payment  on   approxiamately
$17,000,000 of underlying debt.

         On  July  7,  1998,  the  Company  sold  approximately  $16,500,000  of
commercial real estate, net of accumulated depreciation, located in the state of
Oregon (the "Sale").  In  connection  with the Sale,  the Company  satisfied the
balance  of  the  first  mortgage  loan  of  approximately   $17,065,000  (which
represented  approximately 23% of the Company's total liabilities at the time of
sale).



                                                         26

<PAGE>



Results of Operations

         Calendar Year 1998 Compared to Calendar Year 1997

         For the year ended December 31, 1998,  the Company  reported a net loss
of  $8,431,112,  or $1.99 per common share,  on total  revenues of  $25,515,391.
These results include a nonrecurring charge of approximately  $7,084,000 related
to the settlement of the Winston Actions.  See Part I-Item 3. Legal  Proceedings
for a description of the  settlement.  For the year ended December 31, 1997, the
Company  reported a net loss of $3,430,731 on total revenues of $30,091,911,  or
$0.82 per common  share.  The 1997  results  included a charge of approximately
$2,590,000 related to the fair value adjustment of the wraparound notes.

         Total revenues for the year ended  December 31, 1998 were  $25,515,391,
as compared to $30,091,911,  for the year ended December 31, 1997, a decrease of
$4,576,520, or 15%, due to the following:

         Rent decreased $532,575, or 5%, in 1998 compared to 1997. This decrease
is primarily due to the net of: (1) property  sales,  as  previously  described,
which caused a decrease in rent  revenue of  approximately  $1,539,000  which is
offset by (2) the property purchases,  as previously described,  which caused an
increase in rent revenue of approximately $1,006,000.

     Interest income decreased  $5,164,478,  or 39%, for the year ended December
31,  1998  compared  to the year ended  December  31,  1997.  This  decrease  is
primarily  due to: (1) the sale,  by the Company,  of all four of its  remaining
mortgage  backed  securities  during  1997 which  caused a decrease  in interest
income  of  approximately   $3,655,000  and  (2)  a  decrease  of  approximately
$1,436,000 in interest  income as a result of the Company  receiving  payment on
wraparound  notes, as previously  described,  held by the Company as a result of
the sales of the underlying properties by its owners.

         For the year ended  December 31, 1998 the Company had gains on the sale
of real estate and real estate related assets of $5,617,844 as compared to gains
on the sale of real estate and real estate  related  assets of $316,061  for the
year ended December 31, 1997.

         During the year ended  December 31, 1998,  the Company did not have any
available-for-sale   securities   or   U.S.   Treasury   Notes.   All   of   the
available-for-sale securities and U.S. Treasury Notes were sold during 1997 as a
result  of the  Company  selling  all  four  of its  remaining  mortgage  backed
securities during 1997 which resulted in a net gain of approximately  $3,195,000
for the  year  ended  December  31,  1997 and no such  gain  for the year  ended
December 31, 1998.

         Total  operating  expenses  for the year ended  December  31, 1998 were
$19,221,231, as compared to $21,686,805, for the year ended December 31, 1997, a
decrease of $2,465,574, or 11%, due to the following:

         Master lease expense decreased $1,427,752, or 10%, due to a decrease in
the number of  properties  leased by the Company as a result of the sale of some
of the underlying properties by their owners.


                                                         27

<PAGE>



         Salaries,  general and administrative expenses decreased $1,080,948, or
27% primarily due to (1) a decrease in salary expense of approximately  $999,000
as the result of a decrease  in bonuses for  several  executive  officers of the
Company  for the year  ended  December  31,  1998 and (2) a  decrease  in rental
expense of approximately  $563,000 for the corporate  offices for the year ended
December 31, 1998 compared to the same period in 1997.

         Professional  fees  increased  $352,161,  or 38% due  primarily to fees
associated with the Winston Actions and the Winston Settlement.  See Part I-Item
3. Legal  Proceedings  for a description of the Winston  Actions and the Winston
Settlement.

         Interest expense for the year ended December 31, 1998 was $5,474,451, a
decrease of $3,645,103 or 40%, from  $9,119,554  for the year ended December 31,
1997. Such decrease was primarily due to: (1) a decrease in interest  expense of
approximately $2,365,000 due to U.S. Treasury Note(s) short positions which were
closed  simultaneously  with the disposition during 1997, by the Company, of all
four of the remaining  mortgage  backed  securities then held by the Company and
(2) a net  decrease  in  interest  expense of  approximately  $1,063,000  on the
underlying  debt as a result of the property  sales,  as  previously  described,
which were offset by the property  purchases,  as previously  described,  during
1998.

         Depreciation  and amortization for the year ended December 31, 1998 was
$913,527,  an  increase  of  $66,142  or 8%,  from  $847,385  for the year ended
December 31, 1997.  Such increase was primarily  due to property  purchases,  as
previously  described,  and property improvements during 1998 which is offset by
property dispositions, as previously described.

         Calendar Year 1997 Compared to Calendar Year 1996

         The  Company  recognized  a net loss of  $3,430,731  for the year ended
December 31, 1997 as compared to a net loss of $2,486,974 for the same period in
1996 due to the following factors:

         Revenues for 1997 were  $30,091,911,  a decrease of  $3,630,531 or 11%,
from  $33,722,442 for 1996. Such decrease was primarily due to the net of: (1) a
decrease  in  interest  income  of  $4,299,059  resulting  primarily  from (a) a
decrease in interest income of  approximately  $994,000 due to a decrease in the
number  wraparound  notes held by the Company to 28 for the year ended  December
31,  1997 from 30 for the same  period in 1996 and (b) a  decrease  in  interest
income of approximately $3,196,900 due to the sale by the Company of all four of
its mortgage  backed  securities;  (2) a decrease in rental income of $1,102,272
resulting  from a decrease in the number of properties  leased by the Company to
28 for the year ended December 31, 1997 from 30 for the same period in 1996; (3)
an  unrealized  holding loss on U.S.  Treasury  Notes sold short of $316,887 for
1997  compared to an unrealized  holding gain of  $1,217,186  for 1996 and (4) a
gain on the sale of available- for-securities of $3,511,560 for 1997 compared to
a loss on the sale of available-for-sale securities of $350,699 for 1996.



                                                         28

<PAGE>



         Operating   expenses  for  the  year  ended   December  31,  1997  were
$21,686,805, a decrease of $1,221,207 or 5%, from $22,908,012 for the year ended
December 31, 1996. Such decrease was primarily due to the net of: (1) a decrease
in master  lease  expense  of  $1,221,258  due to a  decrease  in the  number of
properties leased by the Company to 28 for the year ended December 31, 1997 from
30 for the same period in 1996; (2) a decrease in property  expenses of $299,971
due to the decrease in the number of  properties  leased by the  Company;  (3) a
decrease in professional fees of $139,627 due to non-recurring transaction costs
associated with the disposition of real estate related assets in 1996 and (4) an
increase in salaries,  general and administrative expenses of $416,800 due to an
increase in bonuses for several executive officers of the Company.

         Interest expense for the year ended December 31, 1997 was $9,119,554, a
decrease of $2,842,226 or 24%, from  $11,961,780 for the year ended December 31,
1996.  Such decrease was  primarily due to a decrease in financing  arrangements
related  to the  disposition  during  1997  by the  Company  of all  four of the
mortgage backed  securities then held by the Company  resulting in a decrease in
interest expense of approximately $2,560,800.

         Depreciation  and amortization for the year ended December 31, 1997 was
$847,385,  an  increase  of  $63,984  or 8%,  from  $783,401  for the year ended
December 31, 1996. Such increase was primarily due to  approximately  $1,253,000
of property improvement purchases made during 1996.

         Valuation allowance,  which is a reduction in the carrying value of the
Wraparound  Notes,  for the year ended  December  31,  1997 was  $2,590,132,  an
increase of $2,400,279  from $189,853 for the year ended  December 31, 1996. The
value of the  underlying  collateral  was  determined  by internal  analysis and
independent appraisals.

Cash Flows

         For the year ended December 31, 1998, cash used in operating activities
was $6,567,933,  cash provided by investing  activities was $24,721,432 and cash
used in financing activities was $19,762,435.  The primary uses and provision of
these  funds  was a direct  result  of the  property  purchases  and  sales,  as
previously  described,  by the  Company  during  1998,  as well as the  payments
received by the Company on its wraparound notes, as previously  described,  as a
result  of the  sale  of the  related  underlying  property,  by its  owner,  an
affiliate  of the  Company  (i.e.,  the  Partnership  that owned the  underlying
property).

         For the  year  ended  December  31,  1997 net  cash  used in  operating
activities of $6,073,949 included (1) a net loss of $3,430,731,  (2) adjustments
of $1,172,247  for non-cash  items and (3) a net change in operating  assets and
liabilities of $1,470,971,  compared to net cash used in operating activities of
$2,783,859 for the year ended  December 31, 1996,  which included (1) a net loss
of  $2,486,974,  (2)  adjustments  of $728,499 for non-cash  items and (3) a net
change in operating assets and liabilities of $431,614.



                                                         29

<PAGE>



         For the year ended  December  31, 1997 net cash  provided by  investing
activities of $47,421,221 included (1) proceeds from principal payments on loans
receivable and wraparound notes of $4,750,010,  (2) the investment in wraparound
notes of $81,934, (3) purchase of building,  land and leasehold  improvements of
$1,363,153,  (4)  proceeds  from  the  sale of real  estate  related  assets  of
$5,258,708,  (5)  proceeds  from the sale of  available-for-sale  securities  of
$36,360,354,  (6) proceeds from the redemption of investments in preferred stock
of $1,730,833, (7) proceeds from the redemption of reverse repurchase agreements
of $35,035,636 and (8) purchase of U.S. Treasury Notes of $34,269,233,  compared
to net cash provided by investing  activities of $14,021,098  for the year ended
December 31, 1996,  which  included (1) proceeds  from  principal  repayments of
$4,817,864 on loans  receivable  and  wraparound  notes,  (2) the  investment in
wraparound notes of $45,550, (3) purchase of leasehold improvements of $213,186,
(4) proceeds  from the sale of real estate  related  assets of  $4,325,177,  (5)
proceeds  from the sale of  available-for-sale  securities of  $23,201,402,  (6)
proceeds  from the  redemption of  investments  of  $2,541,667,  (7) purchase of
$20,142,060 of  available-for-sale  securities,  (8) proceeds from U.S. Treasury
Notes sold short of  $13,989,844,  (9) proceeds  from the  redemption of reverse
repurchase  agreements of  $9,203,125,  (10) purchase of U.S.  Treasury Notes of
$9,143,750 and (11) purchase of reverse repurchase agreements of $14,513,435.

         For the  year  ended  December  31,  1997 net  cash  used in  financing
activities of $31,053,874 included (1) principal payments on mortgages and notes
payable of $6,685,652,  (2) principal  payments on loans payable of $23,829,335,
(3) amounts paid on U.S.  Treasury  Notes payable of $316,887 and (4) amounts in
restricted cash of $222,000,  compared to net cash used in financing  activities
of  $10,657,906  for the year  ended  December  31,  1996,  which  included  (1)
distributions  of $666,622 to Series A Preferred  Stock  holders,  (2) principal
repayments  of  $7,586,850  on  mortgages  and notes  payable,  (3)  proceeds of
$14,522,045 from loans payable,  (4) principal  payments of $18,143,665 on loans
payable and (5) proceeds of $1,217,186 received on U.S. Treasury Notes payable.

Liquidity and Capital Resources

         The  Company,  as the  holder of 44,550  shares of Series C  Redeemable
Preferred  Shares of Kranzco  Realty Trust,  a Maryland  real estate  investment
trust ("Kranzco") as of December 31, 1998,  received from the redemption of such
shares,  in one  installment  on January 29, 1999,  an aggregate  amount of cash
equal to  approximately  $445,500,  plus interest at the rate of 8% per annum on
the  applicable  outstanding  balance of such shares.  Such  redemption  payment
liquidated the Company's  holdings of the Kranzco Series C Redeemable  Preferred
Shares,  and  accordingly,  the  Company is not  entitled  to future  redemption
payments on such shares.

         The  Underlying  Debt on the  Quincy  Property  came due in July  1998.
Beginning July 1998, the mortgagor on the Underlying Debt did not demand payment
while the Partnership,  which owns the Quincy  Property,  attempted to sell the
Quincy  Property.  Although the Underlying  Debt on the Quincy  Property has not
been  satisfied,  regular  monthly debt  payments  have been made by the Company
through March 1999. On March 1, 1999, the mortgagor of the Underlying  Debt sent
a demand letter  seeking to collect the  outstanding  balance of the  Underlying
Debt of approximately $2,910,000.



                                                         30

<PAGE>



         The  Underlying  Debt of  approximately  $850,000  on the Fee  Property
located in Zanesville, Ohio (the "Zanesville Property") came due in October 1998
and the mortgagor on the  Underlying  Debt extended the balance due to May 1999.
The Company is currently seeking to refinance the Zanesville Property.

         The  Company's   existing   borrowings  and  the  encumbrances  on  the
properties securing those borrowings may inhibit or result in increased costs to
the Company in connection with its ability to incur future  indebtedness  and/or
raise substantial equity capital in the marketplace.

         The  Company  has  invested  available  funds  in  secure,  short-term,
interest  bearing  investments.  The Company believes that its levels of working
capital,  liquidity and funds from  operations are sufficient to support present
operations and make any payments required by the Winston Settlement.

         As a result of, and in connection  with,  the settlement of the Winston
Actions,  the Company expects to disburse cash of  approximately  $10.5 million,
including  payments  of the  settlement  consideration  to  Series  A  Preferred
Stockholders,  fees  of the  plaintiff's  and  defendant's  lawyers,  court  and
Securities  and  Exchange  Commission  filing  fees,  printing  costs  and other
expenses.  Although  the  expected  expenditures  of  such  funds  represents  a
substantial amount of the Company's cash reserves,  the Company believes that it
would have  sufficient  cash to continue  operating  in the  ordinary  course of
business.  The Company,  however,  is considering  whether to, and ways it could
raise cash to make additional investments in suitable real estate properties. If
the Company determines to raise additional funds, it may decide to do so through
a public or private  sale of debt or equity  securities,  by  conducting  rights
offerings,  by selling or  realizing on assets  (including,  but not limited to,
sales of its  properties  and  interest  in the Wrap  Debt),  through  corporate
borrowings,  or by other means.  The Company does not  currently  have any plans
with respect to, and may never decide to do, any of the foregoing.  In addition,
the  Company  has no current  understandings  or  arrangements  with  respect to
purchasing additional properties.

         Other  than  described  herein,  management  is not  aware of any other
trends,  events,  commitments  or  uncertainties  that  will, or are likely  to,
materially impact the Company's liquidity.

Impact of Year 2000

         The Year 2000  problem  arises from the historic use of only two digits
(rather  than four) for the  designation  of a year in date  information  within
computer programs. If not corrected,  any of the Company's equipment or software
programs that perform time sensitive  calculations may incorrectly  identify the
year 2000 and beyond or not function after December 31, 1999.  This could result
in miscalculations  or a major failure of certain systems.  The Company may also
be vulnerable to the Year 2000 problems of its tenants,  financial  institutions
or other service vendors and/or other companies with which it conducts  business
(e.g., utility companies, etc).



                                                         31

<PAGE>



         Early in calendar year 1998, the Company developed and initiated a Year
2000 compliance  program,  including  information systems  modifications,  in an
effort to ensure that its business is not  interrupted by the Year 2000 problem.
The  Company's  Year  2000  compliance  program  is  broken  into the  following
components:

         Renovating internal systems and applications and ensuring compliance of
peripheral third party systems.  The Company's internal systems and applications
include  the  accounting  system,  the lease  asset  management  system  and the
operating  system (AS 400).  The Company  uses a number of third  party  package
systems to supplement its internally developed programs.  From time to time, the
Company updates the accounting  system and the operating system with upgrades it
receives  from the  software  manufacturers.  The  software  manufacturers  have
informed  the Company that they will  continue to provide all updates  necessary
for such systems to be Year 2000 compliant.  These software  manufacturers  have
informed the Company that they  anticipate all such upgrades will be provided to
the Company by June 1999. The Company  anticipates  that it will then be able to
implement by June 1999 such upgrades assuming such upgrades are received by June
1999. The lease asset  management  system is currently  being updated to be Year
2000 compliant by the Company using in-house technology. The Company anticipates
that this  upgrade  to the lease  asset  management  system to be  completed  by
September 1999.

         Ensuring  Year 2000  compliance  by  external  companies  that  conduct
business with the Company.  The Company has contacted all of its major  tenants,
which  remit  rent  and  other  payments  to  the  Company,  and  the  financial
institutions,  which process the rental and other payments from major tenants on
behalf of the Company, to inquire about their Year 2000 compliance.  The Company
has not  received  responses  from  all  those  contacted,  but  those  who have
responded  have not  indicated  any problems at this time.  For those  financial
institutions  which process payroll  electronically,  which debits the Company's
bank  account and credits the  employees'  bank  accounts,  the Company  will be
conducting tests to determine Year 2000 compliance.  These tests are expected to
be completed by September 1999. If such financial institutions are not Year 2000
compliant by December 31, 1999, it is possible that  employees  will not receive
direct  deposit  pay, or the correct  amount of such pay, or that the  Company's
bank accounts will be debited incorrect amounts of money.

         Implementing  standards and  conducting  testing in an effort to ensure
that the Company's existing and future systems are Year 2000 compliant.  All new
systems,  whether hardware or software,  are tested before  implementation in an
effort to ensure Year 2000 compliance.

         The Company  believes  that the total cost of its Year 2000  compliance
program will not exceed $50,000. To date, the Company has incurred approximately
$10,000 of such  expenses  which  includes  hardware and software  purchases and
upgrades.  The  Company  does  not  anticipate  that the  costs of any  required
modifications to its information  technology or embedded technology systems will
have a material adverse effect on its financial position,  results of operations
or liquidity, although there can be no assurances that this will be the case.



                                                         32

<PAGE>



         Although  the Company  believes it will have its own systems  compliant
prior to September  1999,  there can be no assurances that it will be able to do
so nor can there be any assurances  that, even if the Company  completes  timely
its Year 2000  compliance  program,  the systems,  when actually  implemented in
full, will work properly independently or in conjunction with the systems of any
third party systems. In addition, the Company would continue to bear the risk of
a  material  adverse  affect,  if  any,  if  its  third  party  systems  do  not
appropriately  address  their own Year 2000  compliance  issues.  The  Company's
current  estimates of the impact of the Year 2000 problem on its  operations and
financial results do not include costs and time that may be incurred as a result
of other  companies'  failure to become Year 2000  compliant on a timely  basis,
which  costs  could be  material.  There can be no  assurance  that  such  other
companies  will achieve Year 2000  compliance  or that any  conversions  by such
companies to become Year 2000  compliant  will be compatible  with the Company's
computer  and  operating  systems.  The  inability  of the Company or any of its
material  third  parties to become Year 2000  compliant in a timely manner could
have a material adverse effect on the Company's  financial  condition or results
of operations.

         In the  event  that the  Company  or  material  third  parties  fail to
complete  their Year 2000  compliance  programs  successfully  and on time,  the
Company's ability to operate its business,  service tenants,  bill,  collect its
revenue  in a timely  manner,  pay  debts  and  communicate  generally  could be
adversely  affected.  Although  there can be no assurance that the conversion of
the Company's  systems will be successful or that the Company's key  third-party
relationships  will have  successful  conversion  programs,  management does not
expect  that any such  failure  would  have a  material  adverse  effect  on the
financial position,  results of operations or liquidity of the Company, although
there can be no assurances that this will be the case.

         The  Company  has  day-to-day   operational   contingency   plans,  and
management  is in the process of updating  these  plans for  possible  Year 2000
specific  operational  requirements.  If the Company's major tenants,  financial
institutions or third party systems are not Year 2000 compliant,  it may have to
arrange for  alternative  sources of services in the fall of 1999 in preparation
for the Year 2000.  The Company does not have any other  contingency  plans with
respect to other  problems  that could arise in its  business as a result of the
Year 2000  problem.  Any of these  could have a material  adverse  effect on the
Company's financial condition or results of operations.

Item 7A.       Quantitative and Qualitative Disclosures about Market Risk.

         At December 31,  1998,  the Company was not invested in any market risk
sensitive  instruments  held for either  trading  purposes or for purposes other
than  trading.  As a result,  the Company is not subject to interest  rate risk,
foreign  currency  exchange rate risk,  commodity  price risk, or other relevant
market risks, such as equity price risk.


Item 8.        Financial Statements and Supplementary Disclosure.

         The Company's  Consolidated  Financial Statements and the notes thereto
appear in Item 14 of this report.



                                                         33

<PAGE>



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

         On October 28, 1998, the Company  terminated its relationship  with the
accounting firm of Deloitte & Touche LLP as independent auditor of the Company's
financial statements. The termination of the relationship with Deloitte & Touche
LLP was not the result of any  disagreements  between the Company and Deloitte &
Touche  LLP on any  matter of  accounting  principles  or  practices,  financial
statement disclosure,  or auditing scope or procedure.  On November 2, 1998, the
Company retained the accounting firm of Ahearn, Jasco + Company, P.A. as its new
independent auditor to audit the Company's  financial  statements for the fiscal
year ending  December 31, 1998. The decision to change  accounting  firms as the
Company's  independent auditor to audit the Company's  financial  statements was
approved by the Audit  Committee of the Company's  Board of Directors on October
27, 1998.

         For further  information  regarding the termination of the relationship
with of Deloitte & Touche LLP and the retention of Ahearn, Jasco + Company, P.A.
as the Company's  independent  auditor, see the Current Report on Form 8-K filed
by the Company with the Commission on November 4, 1998.


                                                         34

<PAGE>



                                                      PART III

         Certain  information  required by Part III is omitted  from this report
since the Company plans to file with the  Securities  and Exchange  Commission a
definitive  proxy  statement for its 1999 Annual  Meeting of  Stockholders  (the
"Proxy  Statement")  no later  than 120 days  after the end of the  fiscal  year
covered by this report, and certain information included therein is incorporated
herein by reference.

Item 10.       Directors and Executive Officers of the Registrant.

         The information regarding the Company's directors required by this Item
is  incorporated  by  reference to the section in the Proxy  Statement  entitled
"Election of Directors."

         The information  regarding the Company's executive officers required by
this Item is  incorporated  by reference to the sections in the Proxy  Statement
entitled "Election of Directors" and "Executive Officers."

         The  information   regarding  compliance  with  Section  16(a)  of  the
Securities  Exchange  Act of  1934  by the  directors,  executive  officers  and
beneficial owners of more than 10% of the Common Stock or the Series A Preferred
Stock required by this Item is  incorporated  by reference to the section in the
Proxy  Statement   entitled  "Section  16(a)  Beneficial   Ownership   Reporting
Compliance."

Item 11.       Executive Compensation.

         The  information  regarding  compensation  of directors  and  executive
officers of the Company  required by this Item is  incorporated  by reference to
the  section  in the  Proxy  Statement  entitled  "Executive  Compensation"  and
"Compensation of Directors."

Item 12.       Security Ownership of Certain Beneficial Owners and Management.

         The  information  regarding  security  ownership of certain  beneficial
owners and management  required by this Item is incorporated by reference to the
section  in  the  Proxy  Statement  entitled  "Security   Ownership  of  Certain
Beneficial Owners and Management."

Item 13.       Certain Relationships and Related Transactions.

         The   information   regarding   certain   relationships   and   related
transactions  required by this Item is incorporated by reference to the sections
in the Proxy Statement entitled  "Compensation  Committee Interlocks and Insider
Participation" and "Certain Relationships and Related Transactions."

                                                         35

<PAGE>



                                                      PART IV

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

(a)(1)         Financial Statements and Financial Statement Schedule.

The following consolidated financial statements of the Company are filed as part
of this report:

                                                                      Page
Independent Auditor's Report of Ahearn, Jasco + Company, P.A.          F-1

Independent Auditor's Report of Deloitte & Touche, LLP                 F-2

Consolidated Balance Sheets - December 31, 1998 and 1997               F-3

Consolidated Statements of Revenues and Expenses -
            Years Ended December 31, 1998, 1997 and 1996               F-4

Consolidated Statements of Comprehensive Loss -
            Years Ended December 31, 1997 and 1996                     F-5

Consolidated Statements of Stockholders' Equity -
            Years Ended December 31, 1998, 1997 and 1996               F-6

Consolidated Statements of Cash Flows -
            Years Ended December 31, 1998, 1997 and 1996               F-7

Notes to Consolidated Financial Statements                             F-9

(a)(2)         Financial Statement Schedule.
               Schedule III Real Estate and Accumulated Depreciation   S-1

               This financial  statement schedule of the Company for each of the
               years ended December 31, 1998,  1997 and 1996 is filed as part of
               this  Form  10-K  and  should  be read in  conjunction  with  the
               Consolidated Financial Statements,  and related notes thereto, of
               the Company.  All other financial  statement  schedules have been
               omitted  because the required  information  is not present or not
               present  in  amounts  sufficient  to  require  submission  of the
               schedule or because the  information  required is included in the
               consolidated financial statements or notes thereto.

(a)(3)         Exhibits.

               The exhibits to this report are listed below:



                                                         36

<PAGE>


Exhibit        Description


     3.1  Certificate  of  Amendment  to  Certificate  of  Incorporation  of the
Company, filed on December 18, 1990 (incorporated by reference to Exhibit 3.1 to
the Company's Form 10- K filed with the Commission on March 29, 1991).

     4.1  Certificate of  Designations  of $.78  Convertible  Series A Preferred
Stock of the Company,  filed on December 18, 1990  (incorporated by reference to
Exhibit 4.1 to the  Company's  Form 10-K filed with the  Commission on March 29,
1991).

     4.2  Certificate  of  Amendment  to  Certificate  of  Designations  of $.78
Convertible  Series A  Preferred  Stock  of the  Company  filed on June 9,  1994
(incorporated  by  reference to Exhibit 4.5 to the  Company's  Form 10-QSB filed
with the Commission on August 15, 1994).

     4.3 Specimen form of Common Stock Certificate (incorporated by reference to
Exhibit 4.2 to the  Company's  Form 10-K filed with the  Commission on March 29,
1991).

     4.4 Specimen form of $.78 Convertible  Series A Preferred Stock Certificate
(incorporated  by reference to Exhibit 4.3 to the Company's Form 10-K filed with
the Commission on March 29, 1991).

     4.5 Rights Agreement,  dated as of March 31, 1993,  between the Company and
The Bank of New York, as Rights Agent (incorporated by reference to Exhibit 1 to
the Company's Form 8-A filed with the Commission on March 31, 1993).

     10.1  Amended  indemnification  agreement  between  the Company and related
parties  (incorporated  by reference to Exhibit 19.2 to the Company's  Form 10-Q
filed with the Commission on May 14, 1992).

     10.2 Second  amended and restated  management and  reimbursement  agreement
between the Company and Concord  (incorporated  by  reference to Exhibit 19.3 to
the Company's Form 10-KSB filed with the Commission on March 30, 1993).

     10.3 Purchase  money  promissory  note purchase money mortgage and security
agreement with The Benderson 85-1 Trust for the  Tonawanda,  New York,  property
(incorporated  by referenced to Exhibit 10.33 to the Company's Form 10-QSB filed
with the Commission on August 14, 1993).

     10.4 1993 Employee Stock Option Plan  (incorporated by reference to Exhibit
10.2 to the Company's Form 10-KSB filed with the Commission on March 31, 1994).

     10.5  1993  Non-Employee   Director  Stock  Option  Plan  (incorporated  by
reference  to  Exhibit  10.21  to the  Company's  Form  10-KSB  filed  with  the
Commission on March 31, 1994).



                                                         37

<PAGE>


Exhibit   Description



     10.6 Property  Management  Agreement,  dated November 20, 1995, between the
Company and Milestone Property  Management , Inc.  (incorporated by reference to
Exhibit  10.31 to the Company's  Form 10-KSB filed with the  Commission on March
30, 1996).

     10.7  Stipulation and Agreement of Settlement  dated August 5, 1998, by and
among John Winston and Leonard S. Mandor,  Robert A. Mandor, Joan LeVine, Harvey
Jacobson, Gregory McMahon, Geoffrey S. Aaronson,  Milestone Properties, Inc. and
Concord Assets Group,  Inc.  (incorporated  by reference to Exhibit 10.01 to the
Company's Form 8-K filed with the Commission on August 14, 1998).

     10.8  Third  Amendedment  of  Management  Agreement  dated  January 1, 1998
between the Company and Concord (filed herewith).

     10.9 Employment  Agreement dated January 1, 1999,  entered into between the
Company and Leonard S. Mandor (filed herewith).

     10.10 Employment  Agreement dated January 1, 1999, entered into between the
Company and Robert A. Mandor (filed herewith).

     10.11 Employment  Agreement dated January 1, 1999, entered into between the
Company and Harvey Shore (filed herewith).

     10.12 Employment  Agreement dated January 1, 1999, entered into between the
Company and Joseph P. Otto (filed herewith).

     10.13 Employment  Agreement dated January 1, 1999, entered into between the
Company and Patrick S. Kirse (filed herewith).

     10.14 Description of Management Incentive Plan (filed herewith)

     10.15 Description of Long Term Incentive Plan (filed herewith)

     21 Subsidiaries of the Company.

     27  Financial  Data  Schedule   Article  5  included  for  Electronic  Data
Gathering,  Analysis and Retrieval (EDGAR) purposed only. This Schedule contains
financial   information  extracted  from  the  consolidated  balance  sheet  and
consolidated  statements  of  revenues  and  expenses  and is  qualified  in its
entirety by reference to such financial statements.

(b)            Reports on Form 8-K.

               On October 16, 1998, a Current  Report on Form 8-K was filed with
               the  Commission  reporting  the  sale  of  the  South  Williamson
               property located in South Williamson, Kentucky.

               On November 4, 1998, a Current  Report on Form 8-K was filed with
               the  Commission  reporting  changes in the  Company's  certifying
               accountant.

                                                         38

<PAGE>



                                                     SIGNATURES

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

                                  MILESTONE PROPERTIES, INC.

                                  By        /s/ Leonard S. Mandor
                                            -----------------------
                                            Leonard S. Mandor
                                            Chairman of the Board and
                                            Chief Executive Officer

                                  Date:     March 25, 1999

         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 in the capacities and on the dates indicated.

Signature and Title                                               Date

/s/ Leonard S. Mandor                                             March 25, 1999
---------------------
Leonard S. Mandor
Chairman of the Board and Chief Executive Officer

/s/ Robert A. Mandor                                              March 25, 1999
--------------------
Robert A. Mandor
President, Chief Financial Officer and Director

/s/ Joseph P. Otto                                                March 25, 1999
------------------
Joseph P. Otto
Vice President and Director

/s/ Patrick S. Kirse                                              March 25, 1999
--------------------
Patrick S. Kirse
Vice President of Accounting
(Principal Accounting Officer)

/s/ Geoffrey Aaronson                                             March 25, 1999
-----------------------
Geoffrey Aaronson
Director

/s/ Harvey Jacobson                                               March 25, 1999
----------------------
Harvey Jacobson
Director

/s/ Gregory McMahon                                               March 25, 1999
---------------------
Gregory McMahon
Director



<PAGE>





INDEPENDENT AUDITORS' REPORT




Milestone Properties, Inc.:

We have  audited  the  accompanying  consolidated  balance  sheet  of  Milestone
Properties,  Inc. and subsidiaries  (the "Company") as of December 31, 1998, and
the related  consolidated  statements  of revenues and  expenses,  stockholders'
equity  and cash flows for the year then  ended.  Our audit  also  included  the
financial statement schedule of real estate and accumulated depreciation.  These
consolidated  financial  statements and the financial statement schedule of real
estate and  accumulated  depreciation  are the  responsibility  of the Company's
management.  Our  responsibility  is to express  an opinion on the  consolidated
financial  statements  and the financial  statement  schedule of real estate and
accumulated depreciation based on our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  consolidated  financial  position  of
Milestone  Properties,  Inc. and  subsidiaries  at December  31,  1998,  and the
results  of their  operations  and their  cash  flows for the year then ended in
conformity with generally accepted accounting principles.  Also, in our opinion,
the financial  statement  schedule of real estate and accumulated  depreciation,
when considered in relation to the basic financial statements,  presents fairly,
in all material respects, the information set forth herein.


/s/ Ahearn, Jasco + Company, P.A.
Pompano Beach, Florida

March 12, 1999



                                                        F-1

<PAGE>





INDEPENDENT AUDITORS' REPORT




Milestone Properties, Inc.:

We have  audited  the  accompanying  consolidated  balance  sheet  of  Milestone
Properties,  Inc. and  subsidiaries  (the "Company") as of December 31, 1997 and
the related  consolidated  statements  of revenues and  expenses,  comprehensive
loss,  stockholders' equity and cash flows for the years ended December 31, 1997
and 1996. Our audits also included the  information  pertaining to 1997 and 1996
contained in the  financial  statement  schedule of real estate and  accumulated
depreciation.  These consolidated  financial  statements and financial statement
schedule are the responsibility of the Company's management.  Our responsibility
is to express an opinion on the 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  consolidated  financial  statements are
free of material  misstatement.  An audit includes  examining,  on a test basis,
evidence  supporting the amounts and disclosures in the  consolidated  financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
consolidated  financial  statement  presentation.  We  believe  that our  audits
provide a reasonable basis for our opinion.

In our opinion,  such consolidated  financial  statements present fairly, in all
material respects,  the consolidated financial position of Milestone Properties,
Inc. and  subsidiaries at December 31, 1997 and the results of their  operations
and  their  cash  flows  for the  years  ended  December  31,  1997  and 1996 in
conformity with generally accepted accounting principles.  Also, in our opinion,
the  information  pertaining  to 1997  and  1996  contained  in  such  financial
statement  schedule,   when  considered  in  relation  to  the  basic  financial
statements taken as a whole,  presents  fairly,  in all material  respects,  the
information set forth therein.


/s/ Deloitte & Touche, LLP
New York, New York

March 20, 1998



                                                        F-2

<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
                                                                December 31, 1998         December 31, 1997
ASSETS
Current Assets:
<S>                                                                <C>                           <C>             
    Cash and cash equivalents                                      $   11,826,301                $     13,435,237
    Restricted cash                                                       222,000                         222,000
    Loans receivable                                                    1,444,442                       1,512,744
    Accounts receivable                                                   812,555                       1,265,625
    Accrued interest receivable                                         5,185,432                       8,465,528
    Due from related party                                                843,085                         391,851
    Prepaid expenses and other                                          1,200,978                       1,034,613 
                                                                        ----------                      ----------
         Total current assets                                          21,534,793                      26,327,598

    Property, improvements and equipment, net                          21,517,884                      19,610,060
    Wraparound notes, net                                              39,529,787                      59,402,931
    Deferred income tax asset, net                                      2,994,070                       4,058,358
    Investments in preferred stock                                        445,500                       2,228,600
    Management contract rights, net                                       193,600                         290,926
    Goodwill and other, net                                               706,562                         304,639
                                                                          --------                        -------

         Total assets                                               $   86,922,196                 $  112,223,112
                                                                    ==============                 ==============

LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities:
    Accounts payable and accrued expenses                           $   2,466,590                $      2,015,942
    Accrued litigation payable                                          9,692,454                               0
    Accrued interest payable                                              306,846                         259,116
    Master lease payable                                                8,933,202                      13,637,564
    Current portion of mortgages and notes payable                      5,782,950                      38,456,766
    Income taxes payable                                                2,836,496                       2,822,119
                                                                        ---------                       ---------
         Total current liabilities                                     30,018,538                      57,191,507

    Mortgages and notes payable                                        42,194,179                      29,282,798
                                                                       ----------                      ----------

         Total liabilities                                             72,212,717                      86,474,305
                                                                       ----------                      ----------

Commitments and Contingencies
Stockholders' equity:
    Common stock ($.01 par value,  10,000,000 shares  authorized,  4,943,633 and
       4,905,959 issued and outstanding in 1998 and 1997, respectively;
       692,591 shares in treasury)                                         49,436                          49,060
    Preferred stock (Series A $.01 par value, $10 liquidation
       preference, 10,000,000 shares authorized, 2,999,707
       and 3,033,995 shares issued and outstanding in 1998
       and 1997, respectively)                                             29,997                          30,341
    Additional paid in surplus                                         45,497,180                      48,105,428
    Accumulated deficit                                               (27,426,716)                    (18,995,604)
    Shares held in treasury - at cost                                  (3,440,418)                     (3,440,418)
                                                                       -----------                     -----------

       Total stockholders' equity                                      14,709,479                      25,748,807
                                                                       ----------                      ----------

       Total liabilities and stockholders' equity                  $   86,922,196                 $   112,223,112
                                                                  ===============                 ===============

</TABLE>
                   See Accompanying Notes to Consolidated Financial Statements

                                                        F-3

<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF REVENUES AND EXPENSES
              For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                                         December 31, 1998      December 31, 1997       December 31, 1996
                                                         -----------------      -----------------       -----------------

REVENUES
<S>                                                         <C>                   <C>                     <C>           
   Rent                                                     $   9,747,973         $   10,280,548          $   11,382,820
   Interest income                                              8,191,371             13,355,849              17,654,908
   Revenue from management company operations                     457,546                512,303                 976,983
   Tenant reimbursements                                        1,002,691              1,261,217               1,184,462
   Management and reimbursement income                             83,091                407,286                 835,811
   Percentage rent                                                414,875                450,423                 266,653
   Amortization of discount - available-for-sale
       securities                                                       0                313,551                 294,079
   Unrealized (loss) gain on treasury notes
       sold short                                                       0               (316,887)              1,217,186
   Gain on sale of real estate and real estate
       related assets                                           5,617,844                316,061                 260,239
   Gain (loss) on sale of available-for-sale securities                 0              3,511,560                (350,699)
                                                               -----------             ----------               ---------

       Total revenues                                          25,515,391             30,091,911              33,722,442 
                                                               ----------             -----------             -----------

EXPENSES
   Master lease expense                                        12,359,713             13,787,465              15,008,723
   Interest expense                                             5,474,451              9,119,554              11,961,780
   Depreciation and amortization                                  913,527                847,385                 783,401
   Valuation allowance on wraparound notes                              0              2,590,132                 189,853
   Salaries, general and administrative                         2,873,482              3,955,434               3,538,634
   Property expenses                                            1,682,791              1,718,346               2,018,249
   Expenses for management company operations                   1,031,690              1,304,166               1,281,317
   Professional fees                                            1,273,555                921,394               1,061,021
   Settlement fees                                              7,084,238                      0                       0
                                                                ----------      -----------------       ----------------

       Total expenses                                          32,693,447             34,243,876              35,842,978 
                                                               -----------            -----------             -----------

Loss before income taxes                                       (7,178,056)            (4,151,965)             (2,120,536)

Provision (benefit) for income taxes                            1,253,056               (721,234)                366,438 
                                                                ----------              ---------                --------

Net loss attributable to common stockholders             $     (8,431,112)        $   (3,430,731)         $   (2,486,974)
                                                            ==============         ==============          ==============

Loss per common share, basic and diluted             $              (1.99)    $            (0.82)     $            (0.65)
                                                        ==================     ==================      ==================

Weighted average common shares outstanding                      4,235,245              4,206,550                3,845,546
                                                           ==============          =============           ==============
</TABLE>
                   See Accompanying Notes to Consolidated Financial Statements

                                                           F-4
<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
                 For the Years Ended December 31, 1997 and 1996

<TABLE>
<CAPTION>
                                                                December 31, 1997                December 31, 1996
                                                                -----------------                -----------------

<S>                                                                 <C>                              <C>          
Net loss attributable to common stockholders                        $ (3,430,731)                    $ (2,486,974)
                                                                      -----------                     ------------

Other comprehensive loss, net of tax:
 Unrealized gain (loss) on securities:
       Unrealized gain (loss) arising during period
             [net of tax provision (benefit) of $1,404,624
             and $(568,030) in 1997 and 1996, respectively]            3,511,560                       (1,420,077)
       Less: Reclassification adjustment for (gain)
             loss included in net income [net of tax provision
             (benefit) of $1,404,624 and $(140,280) in
             1997 and 1996, respectively]                             (3,511,560)                          350,699
                                                                      -----------                          -------

Other comprehensive loss                                                       0                       (1,069,378)
                                                                ----------------                       -----------

Comprehensive loss                                                  $ (3,430,731)                    $ (3,556,352)
                                                                     ============                     ============

</TABLE>

                   See Accompanying Notes to Consolidated Financial Statements

                                                            F-5
<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              For the Years Ended December 31, 1998, 1997 and 1996
<TABLE>
<CAPTION>
                                                                                                                   
                                                       
                                                    Common Stock           Preferred Stock            Treasury Stock               
                                                 Shares        Cost      Shares         Cost      Shares          Cost      
=========================================      =========== =========== ===========  =========== ===========  =============
<S>                                              <C>           <C>       <C>            <C>       <C>         <C>         
Balance, December 31, 1995                       4,483,427     $44,835   3,418,555      $34,186   (692,591)   $(3,440,418)
Conversion of preferred stock into common stock    259,728       2,598   (236,371)      (2,364)                           
Net loss for the year ended December 31, 1996                                                                             
Unrealized holding loss - available-for-sale                                                                              
securities                                                                                                                
                                               ----------- ----------- -----------  ----------- -----------  -------------
Balance, December 31, 1996                       4,743,155      47,433   3,182,184       31,822   (692,591)    (3,440,418)
                                               ----------- ----------- -----------  ----------- -----------  -------------
Conversion of preferred stock into common stock    162,804       1,627   (148,189)      (1,481)                           
Net loss for the year ended December 31, 1997                                                                             
Realization of unrealized holding loss - available-                                                                       
for-sale securities                                                                                                       
                                               ----------- ----------- -----------  ----------- -----------  -------------
Balance, December 31, 1997                       4,905,959      49,060   3,033,995       30,341   (692,591)    (3,440,418)
                                               ----------- ----------- -----------  ----------- -----------  -------------
Conversion of preferred stock into common stock     37,674         376    (34,288)        (344)                           
Reserve for preferred stock settlement repurchase                                                                         
Net loss for the year ended December 31, 1998                                                                             
                                               ----------- ----------- -----------  ----------- -----------  -------------
Balance, December 31, 1998                       4,943,633  $   49,436   2,999,707   $   29,997   (692,591)   $(3,440,418)
                                               =========== =========== ===========  =========== ===========  =============
</TABLE>


<TABLE>
<CAPTION>
                  
                                                           Additional    Unrealized holding                                
                                                           paid in       gain (loss) on    Accumulated    Stockholders'    
                                                             Surplus     available-for-sale    deficit          equity       
=========================================                 =============== ================== ==============  ==============  
<S>                                                          <C>                    <C>       <C>               <C>          
Balance, December 31, 1995                                   $ 48,105,809           $848,982  $(13,077,899)     $32,515,495  
Conversion of preferred stock into common stock                     (234)                                                 0  
Net loss for the year ended December 31, 1996                                                   (2,486,974)     (2,486,974)  
Unrealized holding loss - available-for-sale                                                                                 
securities                                                                       (1,069,378)                    (1,069,378)
                                                          --------------- ------------------ --------------  --------------  
Balance, December 31, 1996                                     48,105,575          (220,396)   (15,564,873)      28,959,143  
                                                          --------------- ------------------ --------------  --------------  
Conversion of preferred stock into common stock                     (146)                                                 0  
Net loss for the year ended December 31, 1997                                                   (3,430,731)     (3,430,731)  
Realization of unrealized holding loss - available-                                                                          
for-sale securities                                                                  220,396                        220,396
                                                           --------------- ------------------ --------------  --------------  
Balance, December 31, 1997                                     48,105,428                  0   (18,995,604)      25,748,807  
                                                          --------------- ------------------ --------------  --------------  
Conversion of preferred stock into common stock                      (32)                                                 0  
Reserve for preferred stock settlement repurchase             (2,608,216)                                       (2,608,216)  
Net loss for the year ended December 31, 1998                                                    (8,431,112)     (8,431,112) 
                                                          --------------- ------------------ --------------  --------------
                                                             $ 45,497,180              $   0  $(27,426,716)     $14,709,479  
Balance, December 31, 1998                                =============== ================== ==============  ==============  
                                                          
</TABLE>
                 See Accompanying Notes to Consolidated Financial Statements


                                                              F-6
<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                               December 31, 1998       December 31, 1997      December 31, 1996
                                                               -----------------       -----------------      -----------------

CASH FLOW FROM OPERATING ACTIVITIES

<S>                                                              <C>                       <C>                  <C>            
   Net loss                                                      $   (8,431,112)           $ (3,430,731)        $   (2,486,974)
   Adjustments to reconcile net loss to
         net cash used in operating activities:
   Depreciation and amortization                                        913,527                 847,385                783,401
   Deferred taxes                                                     1,064,288                (785,479)              (280,948)
   Litigation and settlement fees                                     7,084,238                       0                      0
   Valuation allowance on wraparound notes                                    0               2,590,132                189,853
   Unrealized loss (gain) on treasury notes sold short                        0                 316,887             (1,217,186)
   Amortization of discount - available-for-sale securities                   0                (313,551)              (294,079)
   Realized (gain) loss on sale of available-for-sale securities              0              (3,511,560)               350,699
   Gain on sale of real estate related assets                        (5,617,844)               (316,061)              (260,239)
   Changes in operating assets and liabilities
         Decrease in accounts receivable                                453,070                  94,996                 26,743
         Increase (decrease) in due from related party                 (451,234)                207,242               (442,959)
         Decrease in accrued interest receivable                      3,280,096               1,181,358              1,751,144
         (Increase) decrease in prepaid expenses and other             (671,355)               (760,071)                59,044
         Increase (decrease) in accrued expenses                        450,648                 (15,571)               196,295
         Increase (decrease) in accrued interest payable                 47,730                (880,825)               194,390
         Decrease in master lease payable                            (4,704,362)               (807,787)            (1,347,380)
         (Decrease) increase in income taxes payable                     14,377                (428,625)                75,913
         Decrease in due to related party                                     0                 (61,688)               (81,576)
                                                                ---------------            -------------           ------------

         Net cash used in operating activities                       (6,567,933)             (6,073,949)            (2,783,859)
                                                                     -----------             -----------            -----------

CASH FLOW FROM INVESTING ACTIVITIES

   Principal repayments on loans receivable                              68,302                 171,841                 53,460
   Principal repayments on wraparound notes                           5,190,630               4,578,169              4,764,404
   Investment in wraparound notes                                      (108,838)                (81,934)               (45,550)
   Purchase of building and land                                    (18,515,000)             (1,100,000)                     0
   Purchase of leasehold improvements                                  (484,209)               (263,153)              (213,186)
   Proceeds from realization of real estate related assets           19,407,819               5,258,708              4,325,177
   Proceeds from the sale of real estate assets                      17,379,628                       0                      0
   Proceeds from sale of available-for-sale securities                        0              36,360,354             23,201,402
   Proceeds from redemption of investments in preferred stock         1,783,100               1,730,833              2,541,667
   Purchase of available-for-sale securities                                  0                       0            (20,142,060)
   Proceeds from treasury notes sold short                                    0                       0             13,989,844
   Proceeds from redemption of reverse repurchase agreements                  0              35,035,636              9,203,125
   Purchase of treasury notes                                                 0             (34,269,233)            (9,143,750)
   Purchase of reverse repurchase agreements                                  0                       0            (14,513,435)
                                                           --------------------      -------------------           ------------

         Net cash provided by investing activities                   24,721,432              47,421,221             14,021,098
                                                                    ------------           ------------           ------------
</TABLE>

                                                              F-7
<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (continued)
              For the Years Ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                               December 31, 1998       December 31, 1997      December 31, 1996
                                                               -----------------       -----------------      -----------------

CASH FLOW FROM FINANCING ACTIVITIES

<S>                                                                           <C>                     <C>             <C>      
   Distributions paid to preferred stockholders                               0                       0               (666,622)
   Proceeds from mortgages and notes payable                         18,749,000                       0                      0
   Principal payments on mortgages and notes payable                (38,511,435)             (6,685,652)            (7,586,850)
   Proceeds from loans payable                                               0                        0             14,522,045
   Principal payments on loans payable                                       0              (23,829,335)           (18,143,665)
   Amounts (paid) received on treasury notes payable                         0                 (316,887)             1,217,186
   Amounts in restricted cash                                                0                 (222,000)                     0 
                                                              ------------------         ---------------    -------------------

         Net cash used in financing activities                      (19,762,435)            (31,053,874)           (10,657,906)
                                                                    ------------            ------------           ------------


NET (DECREASE) INCREASE IN
         CASH AND CASH EQUIVALENTS                                   (1,608,936)             10,293,398                579,333

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                       13,435,237               3,141,839              2,562,506
                                                                     ----------               ---------              ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD                         $   11,826,301          $   13,435,237        $     3,141,839
                                                                  =============           =============         ==============

SUPPLEMENTAL DISCLOSURE OF
         CASH FLOW INFORMATION


         Cash paid during the period for interest               $     5,426,721          $   10,000,379         $   11,767,390
                                                                 ==============           =============          =============


         Cash paid during the period for income taxes          $        174,396        $        854,429       $        451,986
                                                                ===============         ===============        ===============
</TABLE>


            See Accompanying Notes to Consolidated Financial Statements

                                                        F-8
<PAGE>

                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Organization and Basis of Presentation

Milestone Properties, Inc. ("Milestone"),  directly and through its wholly owned
subsidiaries,  is  engaged  in the  business  of  owning,  acquiring,  managing,
developing  and  investing  in  commercial  real estate and real estate  related
assets. Milestone, together with its subsidiaries, is hereinafter referred to as
the "Company". Milestone was incorporated on November 30, 1989 under the laws of
the state of Delaware.  On December 18, 1990, the Concord Milestone Income Fund,
L.P.   ("CMIF")  and  Concord   Milestone  Income  Fund  II,  L.P.  ("CMIF  II")
(collectively,  the  "Predecessor  Partnerships")  were merged with and into the
Company (the "Merger"). In the Merger, the Company succeeded to the business and
operations of the Predecessor  Partnerships and the partnership  interest in the
Predecessor Partnerships were converted into shares of Milestone's common stock,
par value $.01 per share (the "Common Stock"),  and Milestone's $.78 Convertible
Series A  preferred  stock,  par value $.01 per share (the  "Series A  Preferred
Stock"), having a $10 liquidation preference.

In October 1995, the Company entered into various  agreements with affiliates of
Concord  Assets Group,  Inc., a New York  Corporation  ("Concord"),  pursuant to
which the Company  acquired  (the  "Acquisition")  certain  real estate  related
assets for approximately  $700,000 in cash and approximately  2,545,000 share of
Common Stock.  The  Acquisition  was treated in a manner similar to a pooling of
interests, and therefore the assets and liabilities have been transferred at the
historical cost basis of Concord.

In October 1995, the Company also completed the transfer (the  "Transfer") of 16
of its  retail  properties  (the  "UPI  Properties")  to its  then  wholly-owned
subsidiary Union Properties Investors, Inc. ("UPI"). UPI was then re-capitalized
and  spun-off  in  November  1995  when  the  Company  distributed  all  of  the
outstanding  shares of common stock of UPI to the Company's Common  Stockholders
(the  "Distribution").  On February 27, 1997,  UPI was merged (the "UPI Merger")
into a  wholly-owned  subsidiary of Kranzco Realty Trust, a Maryland real estate
investment trust ("Kranzco").  In connection with the UPI Merger, UPI terminated
its property management and management services agreements with the Company.

2.     Summary of Significant Accounting Policies

Business

The Company is primarily engaged in a single business industry,  commercial real
estate,  which involves the ownership,  operation and management of 35 interests
in commercial real estate properties consisting of (i)10 fee interests (the "Fee
Properties") and (ii) wraparound  notes (the "Wraparound  Notes") and wraparound
mortgages (the "Wraparound  Mortgages" and,  together with the Wraparound Notes,
the "Wrap  Debt")  which are  secured  by 25  commercial  real  properties  (the
"Underlying   Properties"   and,   together   with  the  Fee   Properties,   the
"Properties"). The Company is also the master lessee (the "Master Lessee") under
individual  leases (the "Master  Leases") on each of the Underlying  Properties.
The Properties  are located in 15 states through the United States.  The Company
also invests directly in real estate and real estate related assets.

                                                        F-9

<PAGE>



Principles of Consolidation

The  consolidated   financial  statements  include  the  accounts  of  Milestone
Properties,  Inc. and its subsidiaries.  Inter-company accounts and transactions
have been eliminated in the consolidated financial statements.

Basis of Accounting, Fiscal Year

The Company's  records are maintained on an accrual basis of accounting for both
financial and tax reporting purposes.  The Company's fiscal year is the calendar
year.

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 the  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with a maturity of
three  months  or less to be cash  equivalents.  The  carrying  value  of  these
investments  approximates  fair market value. The Company has restricted cash of
$222,000 at December 31, 1998, as a compensating  balance for a Letter of Credit
related to a guarantee of performance  associated with the lease of office space
for the  Company's  corporate  offices.  Restricted  cash is held in an interest
bearing  account and becomes  available  for general  operating  purposes of the
Company on December  31,  2000.  Currently,  no amounts are  outstanding  on the
Letter of Credit.

Available-for-Sale Securities

Gains and losses  relating to  available-for-sale  securities  are excluded from
earning and reported as a separate component of stockholders' equity, net of tax
effect, until such amounts are generally realized through the sale or redemption
of the  securities.  Realized  gains  and  losses  are  determined  based on the
specific  identification  method.  At  December  31, 1998 and 1997 there were no
gains or losses  associated  with the  available-for-sale  securities  that were
excluded  from  earnings and reported as a separate  component of  stockholders'
equity.

For the year ended  December 31, 1998 there were no components of  Comprehensive
Income as defined by Financial Accounting Standards Board Statement of Financial
Accounting Standards No. 130 "Reporting  Comprehensive Income" ("SFAS No. 130").
As a result, no comprehensive income statement has been presented.



                                                       F-10

<PAGE>



Property, Improvements and Equipment and Related Depreciation and Amortization

Properties are stated at cost,  less  depreciation  computed on a  straight-line
basis over their  estimated  useful lives of 26.5 - 50 years.  The allocation of
costs  between  land and  depreciable  assets are based upon  estimates  made by
management.   Building  improvements  and  equipment  are  stated  at  cost  and
depreciated  on a  straight-line  basis using an  estimated  useful life of five
years.  Leasehold  improvements  and  leasing  commissions  are  amortized  on a
straight-line  basis  over  the  lesser  of the  estimated  useful  life  or the
remaining term of the Master Lease.

Investment in Wraparound Notes

The  Company  assesses  at least  annually  the  probability  that  the  amounts
collectible  under the  contractual  terms of each Wraparound Note will equal or
exceed the carrying  amount of such Wraparound  Note.  When management  believes
that a Wraparound Note has been impaired,  the Company measures impairment based
on the  estimated  fair  value  of the  underlying  collateral,  using  internal
analysis and independent appraisals when necessary. For the years ended December
31,  1998,  1997 and 1996,  the Company  provided a valuation  allowance  of $0,
$2,590,132 and $189,853, respectively.

The Company reviews each of its property  investments for possible impairment at
least annually,  and more  frequently if  circumstances  warrant.  Impairment is
determined to exist when estimated amounts recoverable through future cash flows
from operations on an un-discounted  basis is less than the property's  carrying
value.  If a property is  determined  to be impaired,  it is written down to its
estimated  fair value to the extent that the  carrying  amount  exceeds the fair
value of the property.  No write downs for  impairment  of property  investments
were recorded in 1998, 1997 and 1996.

The determination of impairment is based, not only upon future cash flows, which
rely upon estimates and  assumptions  including  expense  growth,  occupancy and
rental rates, but also upon market  capitalization and discount rates as well as
other market indicators. The Company believes that the estimates and assumptions
used  are  appropriate  in  evaluating  the  carrying  amount  of the  Company's
Wraparound Notes and  Properties.  However,  changes  in market  conditions  and
circumstances  may occur in the near term which would cause these  estimates and
assumptions  to change,  which,  in turn,  could  cause the  amounts  ultimately
realized  upon  the  sale or  other  disposition  of the  Wraparound  Notes  and
Properties to differ materially from their carrying value. Such changes may also
require future write-downs.

Management Contract Rights and Goodwill

Management  contract  rights and goodwill are being  amortized  over a period of
approximately  seven years. The amortization for the management  contract rights
has been  accelerated  for those  agreements  that are  terminated  prior to the
expiration of the initial lease term.



                                                       F-11

<PAGE>



Capital Structure

In February 1997, the Financial  Accounting Standards Board issued SFAS No. 129,
"Disclosure of Information about Capital Structure" which establishes  standards
for disclosing information about an entity's capital structure. SFAS No. 129 was
effective for financial  statement  periods ending after December 15, 1997. SFAS
No. 129 will not have any material  effect on current or prior period  financial
statement  display  presented by the Company.  The new  standard  continues  the
previous  requirements to disclose certain information about an entity's capital
structure as  prescribed  by  Accounting  Principles  Board Opinion No. 15 ("APB
15"), "Earnings per Share".

Income Taxes

The  Company  accounts  for income  taxes in  accordance  with the SFAS No. 109,
"Accounting  for Income Taxes" which  requires the  recognition  of deferred tax
assets and  liabilities at currently  enacted tax rates for the expected  future
tax benefits or  consequences of events that have been included in the financial
statements  and tax  returns.  Deferred  taxes are  provided  for the  temporary
differences  between the tax basis of the assets and liabilities and the amounts
reported in the financial  statements.  A valuation allowance is recognized,  if
necessary, to reduce the net deferred tax asset to an amount that is more likely
than not to be realized.

Loss per Common Share

     The Company has adopted SFAS No. 128,  "Earnings per Share" which  requires
companies with complex capital structures or common stock equivalents to present
both  basic and  diluted  earnings  per share  ("EPS") on the face of the income
statement.  Basic EPS is calculated as income  available to common  stockholders
divided by the weighted average number of common shares  outstanding  during the
period.   Diluted  EPS  is  calculated  using  the  "if  converted"  method  for
convertible securities and the treasury stock method for options and warrants as
previously  prescribed by APB No. 15, "Earnings per Share." The adoption of SFAS
No. 128 did not have an impact on the Company's reported results.

Basic and  diluted  earnings  per share are based on the same  weighted  average
number of shares of common stock and common stock equivalents outstanding, which
were  4,235,245,  4,206,550 and 3,845,546 for the years ended December 31, 1998,
1997 and 1996,  respectively.  Convertible Series A Preferred Stock amounts have
been  excluded  from the  weighted  average  shares  for 1998,  1997 and 1996 as
inclusion would be  anti-dilutive.  Options to purchase 313,700 shares of common
stock in 1998 and 1997 and 176,000 in 1996,  were  outstanding  at each year end
but were not  included  in the  computation  of  diluted  earnings  per share as
inclusion would be anti-dilutive.



                                                       F-12

<PAGE>



Reclassifications

Certain  prior year  amounts  have been  reclassified  to conform  with the 1998
financial presentation.

3.     Acquisition and Disposition of Real Estate and Real Estate Related Assets

On November  10, 1998,  the Company  completed  the purchase of Lincoln  Park, a
46,190 square foot strip mall located in Davie,  Florida (Broward  County),
from an unrelated third party for  $3,840,000.  In connection with the purchase,
the Company  obtained a $3,219,000 first mortgage loan which bears interest at a
rate of 7.58% per annum.  Such first  mortgage  requires  monthly  principal and
interest payments of $22,684 based upon a 30 year self liquidating  amortization
schedule,  with a balloon  payment of  approximately  $2,854,000 due November 1,
2008.  The strip mall is currently  97% occupied by local  tenants who are
subject to operating  leases ranging from one to five years with various renewal
options.

On October 27, 1998, the Company  completed the purchase of Pine Crest Square, a
40,408 square foot strip mall located in Fort Lauderdale,  Florida (Broward
County),  from an unrelated third party for  $3,200,000.  In connection with the
purchase,  the Company  obtained a $2,400,000  first  mortgage  loan which bears
interest  at a rate of 7.0% per annum.  Such  first  mortgage  requires  monthly
principal and interest payments of $15,967 based upon a 30 year self liquidating
amortization  schedule,  with a balloon payment of approximately  $2,063,000 due
November  11,  2008.  The  strip mall is  currently  97% occupied by local
tenants  subject to operating  leases  ranging from one to 19 years with various
renewal options.

On October 13, 1998, the Company completed the purchase of Mandarin  Central,  a
63,346 square foot  strip mall  located in  Jacksonville,  Florida  (Duval
County),  from an unrelated third party for  $4,650,000.  In connection with the
purchase,  the Company  obtained a $3,950,000  first  mortgage  loan which bears
interest  at a rate of 8.0% per annum.  Such  first  mortgage  requires  monthly
principal and interest payments of $28,984 based upon a 30 year self liquidating
amortization  schedule,  with a balloon payment of approximately  $3,542,000 due
October 1, 2008. The strip mall is currently 93% occupied by local tenants
subject to operating  leases  ranging from one to 16 years with various  renewal
options.

On October 1, 1998,  a wraparound  note held by the Company on a 285,655  square
foot shopping center property located in South Williamson,  Kentucky (the "South
Williamson Property"),  was paid as a result of the sale of the South Williamson
Property by its owner, an affiliate of the Company (i.e.,  the Partnership  that
owned the South Williamson Property), to an unrelated third party. In connection
with the sale of the South  Williamson  Property,  the  Company,  as the  Master
Lessee on a Master Lease on the South Williamson Property,  canceled such Master
Lease.  The  negotiated  sales  price  of  the  South  Williamson  Property  was
approximately  $14,874,000 which included  acquiring the property subject to the
$14,773,655  remaining  balance  of the  underlying  mortgage  debt on the South
Williamson  Property  (which  represented  approximately  21% of Company's total
liabilities at such time). The wraparound note on the South Williamson  Property
represented  approximately  13% of the Company's total assets at such time. As a
result  of the  sale  of the  South  Williamson  Property,  the  payment  of the
wraparound  note and the  satisfaction  of the  underlying  mortgage  debt,  the
Company realized approximately $100,000 in cash and a book gain of approximately
$4,197,000.

                                                       F-13

<PAGE>



On September 21, 1998, a wraparound  note held by the Company on a 35,496 square
foot shopping center property located in Vestivia Hills,  Alabama (the "Vestivia
Hills  Property"),  was  paid as a  result  of the  sale of the  Vestivia  Hills
Property by its owner, an affiliate of the Company (i.e.,  the Partnership  that
owned the Vestivia Hills  Property),  to an unrelated third party. In connection
with the sale of the Vestivia Hills Property,  the Company, as the Master Lessee
on a Master Lease on the Vestivia  Hills  Property,  canceled such Master Lease.
The  negotiated  sale price of the Vestivia  Hills  Property  was  approximately
$1,640,000.  Of the gross proceeds,  $722,638 was used to satisfy the underlying
mortgage debt on the Vestivia Hills Property (which represented approximately 1%
of the Company's  total  liabilities at such time).  The wraparound  note on the
Vestivia  Hills Property  represented  approximately  3% of the Company's  total
assets at such time. As a result of the sale of the Vestivia Hills Property, the
payment of the wraparound note and the  satisfaction of the underlying  mortgage
debt,  the Company  realized net cash proceeds of  approximately  $875,000 and a
book gain of approximately $338,000.

On  September  11, 1998,  the Company  completed  the purchase of Country  Grove
Plaza, a 16,642 square foot strip mall located in West Palm Beach,  Florida
(Palm Beach County), from an unrelated third party for $1,100,000. In connection
with the purchase,  the Company  obtained a $880,000  first  mortgage loan which
bears  interest  at a rate of 7.51% per  annum.  Such  first  mortgage  requires
monthly  principal  and  interest  payments of $6,159  based upon a 30 year self
liquidating  amortization  schedule,  with a balloon  payment  of  approximately
$780,150 due September 1, 2008. The strip mall is currently 93% occupied by
local  tenants  subject to  operating  leases  ranging from one to 13 years with
various renewal options.

On July 15, 1998,  the Company  completed the purchase of Teeca Plaza,  a 22,589
square foot strip mall located in Boca Raton,  Florida (Palm Beach County),
from an unrelated third party for  $2,075,000.  In connection with the purchase,
the Company  obtained a $1,800,000 first mortgage loan which bears interest at a
rate of 7.39% per annum.  Such first  mortgage  requires  monthly  principal and
interest payments of $12,450 based upon a 30 year self liquidating  amortization
schedule,  with a balloon payment of approximately  $1,591,000 due July 1, 2008.
The  strip mall is currently  100%  occupied by local  tenants  subject to
operating leases ranging from three to 26 years with various renewal options.

On July 7,  1998,  the  Company  completed  the sale of its  Mountain  View Mall
property  located in Bend,  Oregon (the "Bend  Property") to an unrelated  third
party for approximately $17,750,000. The Company realized cash net proceeds from
the  sale  of  approximately  $319,200,  after  paying  off the  balance  of the
underlying first mortgage of $17,065,000 (which represented approximately 23% of
the Company's  total  liabilities  at such time) and used a portion of the funds
for  closing  costs and net credits to the buyer.  At the time of the sale,  the
Bend Property represented approximately 17% of the Company's total assets with a
carrying value, net of accumulated depreciation,  of approximately  $16,482,000.
As a result of the  sale,  the  Company  realized  a book gain of  approximately
$947,000.



                                                       F-14

<PAGE>



On April 17, 1998,  the Company  completed  the purchase of Orange Park Shopping
Center,  a 21,509 square foot strip mall  located in Orange Park,  Florida
(Clay County), from an unrelated third party for $1,500,000.  In connection with
the purchase,  the Company obtained a $1,300,000 first mortgage loan which bears
interest  at a rate of 7.39% per annum.  Such first  mortgage  requires  monthly
principal and interest  payments of $8,992 based upon a 30 year self liquidating
amortization  schedule,  with a balloon payment of approximately  $1,147,600 due
April 1, 2008.  The strip mall is currently  90% occupied by local tenants
subject to operating  leases ranging from two to six years with various  renewal
options.

On April 1, 1998,  the Company  completed  the purchase of Regency Walk Shopping
Center,  a 34,436 square foot strip mall located in  Jacksonville,  Florida
(Duval County), from an unrelated third party for $2,150,000. In connection with
the purchase,  the Company obtained a $1,840,000 first mortgage loan which bears
interest  at a rate of 7.87% per annum.  Such first  mortgage  requires  monthly
principal and interest payments of $13,335 based upon a 30 year self liquidating
amortization  schedule,  with a balloon payment of approximately  $1,643,700 due
May 1, 2008.  The  strip mall is currently  72% occupied by local  tenants
subject to operating  leases ranging from two to nine years with various renewal
options.

On February 9, 1998, a wraparound  note held by the Company on a 128,864  square
foot shopping center property located in Chili, New York (the "Chili Property"),
was assigned to an unrelated third party for $75,000. The Company, as the master
lessee on a Master Lease on the Chili Property,  terminated such Master Lease on
April 30, 1996. The  assignment of the  wraparound  note relieved the Company of
its  responsibility to make any payments on the underlying  mortgage debt on the
Chili  Property.  As a result of the  assignment of the  wraparound  note on the
Chili  Property and the relief of the  Company's  obligation  to the  underlying
mortgage debt, the Company realized net cash proceeds of  approximately  $75,000
and a book gain of approximately $82,000.

On October 30, 1997, a  wraparound  note held by the Company on a 87,436  square
foot shopping center property located in Marion,  Ohio (the "Marion  Property"),
was paid as a  result  of the  sale of the  Marion  Property  by its  owner,  an
affiliate of the Company (i.e., the partnership that owned the Marion Property),
to an unrelated third party. In connection with the sale of the Marion Property,
the  Company,  as the Master  Lessee on a Master  Lease on the Marion  Property,
canceled such Master Lease.  The negotiated  sales price of the Marion  Property
was  approximately  $2,750,000.  Of the gross  proceeds,  $1,770,298 was used to
satisfy the underlying  mortgage debt on the Marion Property (which  represented
approximately  3%  of  the  Company's  total  liabilities  at  such  time).  The
wraparound  note on the  Marion  Property  represented  approximately  4% of the
Company's  total  assets at such  time.  As a result  of the sale of the  Marion
Property,  the  payment  of the  wraparound  note  and the  satisfaction  of the
underlying   mortgage   debt,   the  Company   realized  net  cash  proceeds  of
approximately $986,000 and a book gain of approximately $200,000.



                                                       F-15

<PAGE>



On September 24, 1997,  the Company  completed the purchase of Pine Oak Plaza, a
16,994 square foot strip mall located in Sunrise, Florida (Broward County),
from an  unrelated  third  party for  $1,100,000  in cash.  On May 1, 1998,  the
Company secured a $1,160,000  first mortgage loan which bears interest at a rate
of 7.48% per annum.  Such first  mortgage  loan requires  monthly  principal and
interest  payments of $8,095 based upon a 30 year self liquidating  amortization
schedule,  with a balloon payment of  approximately  $1,027,700 due May 1, 2008.
The strip mall is currently 100% occupied by local tenants who are subject
to operating leases ranging from three to 13 years with various renewal options.

As of April, 1996, the Company  terminated,  by written notice, the Master Lease
associated  with the 56,908 square foot shopping  center  located in Prattville,
Alabama  (the  "Prattville  Property").  In July 1996,  the  Underlying  Debt of
$2,325,000  associated with the Prattville  Property came due, and the mortgagor
extended  the  balance  due to  December  1996.  Although  the  Underlying  Debt
associated with the Prattville  Property had not been paid off,  regular monthly
debt payments had been made by the Company  through  February  1997. On March 3,
1997, the mortgagor  stated its intention to commence  foreclosure  proceedings.
June 12, 1997, a wraparound note held by the Company on the Prattville  Property
was paid as a result of the foreclosure sale, of the Prattville Property, by the
bank (the holder of the underlying  mortgage debt) to an unrelated  third party.
As a result of the foreclosure sale by the bank of the Prattville Property,  the
payment of the wraparound note and the  satisfaction of the underlying  mortgage
debt, the Company realized a book gain of approximately $120,000.

As of  December  31, 1998 and 1997,  the Company did not have any related  CMBSs
("CMBSs"),  Loans Payable,  U.S. Treasury Notes sold short or reverse repurchase
agreements.

From August 1994 to November  1997,  the Company  bought and  subsequently  sold
various  issues of mortgage loan  securitizations  which were backed by mortgage
loans on commercial and  multi-family  dwellings.  To facilitate the purchase of
such CMBSs,  short term borrowing  arrangements  ("Loans  Payable") were entered
into with the brokers from which CMBSs were purchased.  The Company engaged in a
variety of interest rate management techniques in order to attempt to manage the
effective  maturity and/or interest rate risks  associated with the CMBSs.  Such
techniques  included selling short U.S. Treasury Notes which were collateralized
by reverse repurchase agreements.

On November 10,  1997,  the Company  sold its  remaining  ownership of the CMBSs
consisting of a Nomura Series 1996-MDV B2 certificate (the "MDV Certificate"), a
DLJ 1994-MF11 B2  certificate  (the "B2  Certificates"),  and a DLJ 1994-MF11 B3
certificate (the "B3 Certificate") (the MDV Certificate,  the B2 Certificate and
the B3 Certificate may be referred to collectively herein as the "Certificates")
and  repaid  the  associated  Loans  Payable.  At the  time  of the  sale of the
Certificates,  the Company had  outstanding  U.S.  Treasury Note short positions
totaling  $25,500,000  associated with the Certificates.  In connection with the
sale of the  Certificates,  the Company closed all such remaining U.S.  Treasury
Note short positions.  As a result of the sale, the Company realized a book gain
of approximately $3,500,000.



                                                       F-16

<PAGE>



On January 23, 1997,  the Company sold its ownership of the CMBSs  consisting of
the Nomura Series 1994-MD1 B3A (the "MD1 Certificate") and repaid the associated
Loan Payable.  At the time of the sale of the MD1  Certificate,  the Company had
outstanding U.S. Treasury Note short positions totaling  $10,000,000  associated
with the MD1  Certificate.  In connection with the sale of the MD1  Certificate,
the Company closed $9,500,000 of U.S. Treasury Note short positions. As a result
of the sale, the Company realized a book loss of approximately $1,100,000.

The Company had $32,314,853 of CMBSs and $23,829,335 of associated Loans Payable
as of December  31,  1996.  Additionally,  the Company has  $33,952,346  of U.S.
Treasury  Notes sold short and  $34,718,749  of  associated  reverse  repurchase
agreements as of December 31, 1996.

From time to time the Company  sells,  or may take action to sell,  certain real
estate  assets which it does not believe to be material to the overall  business
or financial condition of the Company.

4.     Property, Improvements and Equipment

Property,  improvements and equipment at December 31, 1998 and 1997 consisted of
the following:

<TABLE>
<CAPTION>

                                                     December 31, 1998        December 31, 1997
============================================  ======================== ========================
<S>                                                      <C>                      <C>          
Land                                                     $   1,961,500            $   1,140,000
Building                                                    20,978,628               24,181,311
Leasehold improvements and equipment                         1,015,162                  692,609
                                                             ---------                  -------
Total, at cost                                              23,955,290               26,013,920
Less: Accumulated depreciation                             (2,437,406)              (6,403,860)
                                                            ---------                ---------
Total, net                                              $  21,517,884            $   19,610,060
                                                        ==============           ==============
--------------------------------------------  ------------------------ ------------------------
</TABLE>

5.     Investment in Wraparound Notes

Investment in Wraparound Notes  represents  notes due from limited  partnerships
(the "Partnerships") which has previously been syndicated by Concord and certain
of its  affiliates.  Certain  directors  and  officers  of the  Company are also
directors,  officers and controlling stockholders of the general partner of each
of the  Partnerships.  The  syndication  of a Partnership  by Concord  typically
involved the sale of a property (the "Concord Property") owned by Concord to the
Partnership for cash and certain non-recourse  promissory notes (the "Wraparound
Notes"),  payment of which was secured by the Underlying  Property.  The related
Wraparound Notes were subordinate to the Underlying  Property Mortgage Debt (the
"Underlying  Debt") of the Concord  Property.  Concord  then  Master  Leases the
Concord  Property back from the  Partnership for a fixed annual rental fee which
entitled  Concord to all rents under the tenant  operating  leases.  Concord was
required to satisfy all other landlord obligations. Pursuant to the Acquisition,
the Company  acquired 35 Wraparound  Notes,  assumed the Underlying Debt and was
assigned the interest in the Master  Lease.  The  Partnerships  are obligated to
make fixed payments of principal and interest on certain  Wraparound Notes. Such
payments approximate the Master Lease obligations.  The payments received by the
Company are used to make the Master Lease payments to the Partnerships.



                                                       F-17

<PAGE>



Upon the sale of an  Underlying  Property,  proceeds  are  initially  applied to
satisfy  the  Underlying  Debt,  and the  balance,  to the extent  proceeds  are
available,  is divided between a preferred return to the  Partnership's  limited
partners and then repayment of the Wraparound Note.

Each of the Wraparound Notes gives the Company a lien on the Underlying Property
as well as the Partnership's  interest in the Master Lease. The Wraparound Notes
are  subordinate to the Underlying  Debt. The Wraparound  Notes have  maturities
ranging from 1998 to 2016.  The scheduled  principal  receipts of the Wraparound
Notes are as follows (dollar amounts in thousands):


     Year Ending December 31st:
=====================================
       1999                 $   3,766
       2000                    20,535
       2001                       380
       2002                       418
       2003                       460
  Thereafter (a)               13,971
                               ------
      Total                $   39,530
                           ==========
------------------  -----------------

a - Excludes $11,202 of the original issue discount.

The following  schedule  depicts  Wraparound  Notes which are subordinate to the
Underlying Debt on such properties:
<TABLE>
<CAPTION>

                                                                  Face Amount of                                              
                                      Interest    Final Maturity     Mortgage           Carrying Amount of     Interest Due
      Location         Closing Date   Rate (%)         Date            Loans              Mortgage Loans        and Accrued
=====================  ============= ===========  ==============  =============== ==== =====================  ===============
<S>                         <C>             <C>         <C>            <C>                        <C>                <C>     
Deland, FL                  10/23/95        9.70        12/31/99       $1,917,696                 $1,400,000         $194,513
Rochester, NY               10/23/95        9.70        12/31/14        1,750,529                  1,469,375          192,191
                                           10.00        12/31/14          183,567                    130,625                0
Pascagoula, MS              10/23/95        9.75        12/31/16        2,035,284                  1,190,217          207,549
                            10/23/95       12.00        12/31/16          187,335                    175,125                0
                            10/01/97       11.00        12/31/16           39,742                     34,658                0
                            01/10/98       11.00        12/31/16           72,328                     68,428                0
Janesville, WI              10/23/95       10.25        12/31/15        2,138,975                  1,400,001          229,907
                            02/11/98       11.00        12/31/15           16,584                     15,000                0
Marietta, OH                10/23/95        8.32        12/31/14        3,101,392                  2,894,642          301,640
                            10/23/95       11.00        12/31/14           28,548                     20,000                0
Mt. Pleasant, PA            10/23/95        9.18        12/31/15        2,498,786                  2,287,405          239,245
                            10/01/97       11.00        12/31/14           14,478                     12,626                0
No. Canton, OH              10/23/95        9.11        12/31/14        2,813,466                  2,146,933          267,240
                            10/23/95       11.00        12/31/14           37,589                     26,575                0
                            10/15/96       11.00        12/01/14           32,385                     25,650                0
Owensboro, KY               10/23/95       10.00        12/31/15        2,739,304                  2,738,751          287,091
                             4/15/98       11.00        12/31/15           27,217                     25,410                0
Quincy, IL                  10/23/95       10.00        12/31/98        5,633,307    a             1,885,774          191,973
Natchez, MS                 10/23/95       10.00        05/01/08        3,479,370    a             1,228,505          133,969
</TABLE>

                                                       F-18
<PAGE>
<TABLE>
<CAPTION>
                                                                  Face Amount of                                              
                                      Interest    Final Maturity     Mortgage           Carrying Amount of     Interest Due
      Location         Closing Date   Rate (%)         Date            Loans              Mortgage Loans        and Accrued
=====================  ============= ===========  ==============  =============== ==== =====================  ===============
<S>                         <C>             <C>         <C>            <C>                        <C>                <C>     

Streetsboro, OH             10/23/95        9.68        12/31/14        2,254,317                  1,748,954          228,135
                            10/23/95        11.0        12/31/14           29,643                     21,447                0
                            10/15/96       11.00        12/01/14           24,746                     19,600                0
                            11/07/97       11.00        12/31/14           11,345                     10,000                0
Sandy, PA                   10/23/95       10.00        12/31/99        2,740,202    a             1,164,620          122,012
Franklin, PA                10/23/95       10.00        12/31/99        2,740,202    a             1,164,620          122,012
Clarksville, TN             10/23/95        9.75        12/31/99        3,379,184    a             1,326,879          135,311
Montgomery, AL              10/23/95        9.75        12/31/99        2,185,302                    875,000          222,855
Paris, TN                   10/23/95       10.00        12/31/99        3,160,401                  1,347,733          330,938
                            10/23/95       11.00        12/31/99           74,163                     51,016                0
Savannah, TN                10/23/95        9.88        12/31/99        1,157,445                    430,001          119,619
Danville, IL                10/23/95        9.75        12/31/99        1,764,370                    800,001          179,923
Warsaw, VA                  10/23/95        9.75        12/31/99        1,373,947                  1,017,030          140,115
Southwick, MA               10/23/95        9.75        12/31/99        1,368,587                    816,275          139,564
Walpole, NH                 10/23/95        9.75        12/31/99        1,368,587                    954,564          139,564
Baton Rouge, LA             10/23/95        9.75        12/31/99        4,294,990                  3,832,052          437,994
Palatka, FL                 10/23/95        9.75        12/31/99        2,288,453                  1,607,290          233,379
                            12/09/98       11.00        12/31/99           27,687                     24,650                0
Columbus, NE                10/23/95        9.75        12/31/99        2,376,262                  2,111,331          242,328
Hamilton, NY                10/23/95        9.75        12/31/99        1,435,266                  1,031,024          146,365
                                                                        ---------                  ---------          -------
                                                          Totals      $62,802,981                $39,529,787       $5,185,432
                                                                       ==========                 ==========        =========
---------------------  ------------- -----------  --------------  --------------- ---- ---------------------  ---------------
</TABLE>

a - Includes discount elements totaling in aggregate $11,202,305.

The following  schedule  represents a roll forward of  Wraparound  Notes for the
years ended December 31, 1998 and 1997:

<TABLE>
<CAPTION>

                                                               1998                      1997
=================================================== ========================== =========================
<S>                                                              <C>                       <C>          
Beginning balance                                                $  59,402,931             $  71,431,945
Investment in wraparound notes                                         108,838                    81,934
Principal repayments                                               (5,190,630)               (4,578,169)
Notes satisfied from property sales                               (14,791,352)               (4,942,647)
Valuation allowance                                                          0               (2,590,132)
                                                              ----------------               ----------
Ending balance                                                   $ 39,529,787             $  59,402,931 
                                                                 =============            ==============
--------------------------------------------------- -------------------------- -------------------------
</TABLE>

At December 31, 1998 and 1997 the Wraparound Notes had a valuation  allowance of
$0 and $2,590,132,  respectively. The aggregate carrying value of the Wraparound
Notes adjusted by the valuation allowance is $0 and $12,160,890, respectively.



                                                       F-19

<PAGE>



Included in the Wraparound Notes carrying amount is $6,769,960,  which represent
the  non-discount  portion,  and  $11,202,305,  which  represents  the  discount
portion,  of certain  original  issue  discount  mortgage  notes (the  "Discount
Notes").  The carrying  value of the  Wraparound  Notes  exclude  such  discount
portion of the Discount  Notes.  The  Partnerships  are  obligated to make fixed
payments on the non-discount portion of the Discount Notes and are not obligated
to make any principal  payments on the discount  portion of the Discount  Notes.
The Company does not recognize  income from the discount portion of the Discount
Notes due to uncertainty regarding the realization of such amounts.

On December 31, 1998 the Wraparound Note on the Underlying  Property  located in
Quincy,  Illinois,  (the  "Quincy  Property")  matured.  The face  amount of the
Wraparound Note on the Quincy Property is approximately $4,904,000,  such figure
accounts for the 1998  principal  payment of $728,919  which was made in January
1999. The Company,  as the holder of the Wraparound  Note on the Quincy Property
is currently  seeking  payment from the  Partnership that issued such Wraparound
Note.  On March 1, 1999,  the  mortgagor  of the  Underlying  Debt sent a demand
letter to collect the  outstanding  balance of  approximately  $2,910,000 of the
Underlying  Debt which had matured in July 1998. In accordance with the terms of
the wraparound  mortgages,  the Underlying  Debt must be satisfied  prior to the
Company  receiving  payment from the  Partnership on the Wraparound  Note on the
Quincy  Property.  See the  discussion  regarding  the  Quincy  Property  in the
footnote entitled Leases herein.

The maturity dates of the remaining 39 Wraparound Notes and Wraparound Mortgages
range from  December 1999 to December  2016,  of which 17  Wraparound  Notes and
Wraparound Mortgages are due to mature on December 31, 1999, (the "Maturing Wrap
Debt").  The Company,  as the holder of the Maturing Wrap Debt will seek payment
from each  Partnership  that issued the respective  Maturing Wrap Debt. In order
for each such  Partnership  to make  payment,  one of the  following  events may
occur;  (i) the  Partnership  may  sell the  Underlying  Property  securing  the
respective  Maturing  Wrap Debt,  (ii) the Company,  as the holder of a Maturing
Wrap Debt, may obtain ownership of the Underlying Property securing the Maturing
Wrap Debt in lieu of payment on the Maturing Wrap Debt via  foreclosure or (iii)
the Company may extend the  Maturing  Wrap Debt to a future  maturity  date upon
terms to be determined at that time. See the  discussion  regarding the Maturing
Wrap Debt in the footnote entitled Leases herein.

6.     Investments

On February  27,  1997,  UPI was merged (the "UPI  Merger")  into a wholly owned
subsidiary of Kranzco  Realty Trust,  a Maryland  real estate  investment  trust
("Kranzco").  In  connection  with the UPI  Merger,  the  356,400  shares of UPI
Preferred  Stock which the  Company  owned as of the date of the UPI Merger were
converted  into  356,400  shares of  Kranzco's  Series C  Cumulative  Redeemable
Preferred Shares (the "Kranzco Series C Shares").  The Company believes that the
terms of the  Kranzco  Series  C  Shares  are  similar  to the  terms of the UPI
Preferred  Stock,  because  the  Kranzco  Series  C  Shares  (i)  have  the same
redemption price and liquidation preference and price ($10 per share) as the UPI
Preferred  Stock,  (ii) pay  cumulative  dividends  at the rate  paid on the UPI
Preferred Stock as of the date of the UPI Merger (8%), and (iii) are required to
be redeemed ratable on a quarterly basis over a two year period from the date of
the UPI Merger,  as compared to the UPI Preferred Stock,  which was not required
to be redeemed  until the year 2002 (although UPI could,  at its option,  redeem
shares of UPI Preferred Stock at any time).


                                                       F-20

<PAGE>



The  Company,  as the  holder of 44,550  shares of Kranzco  Series C  Redeemable
Preferred  Shares as of December  31,  1998,  is  entitled  to receive  from the
redemption of such shares, in one installment, an aggregate amount of cash equal
to  approximately  $445,500,  plus  interest  at the rate of 8% per annum on the
applicable  outstanding  balance of such shares.  Such final redemption  payment
liquidated  the  Company's  holdings of Kranzco  Series C  Redeemable  Preferred
Shares,  and  accordingly,  the  Company is not  entitled  to future  redemption
payments on such shares.

7.     Leases

As Lessor

The  Properties  have a gross  leaseable  area of  approximately  2,218,645  and
2,642,048  square  feet of  which  approximately  96% and 94% was  leased  as of
December 31, 1998 and 1997, respectively.

Minimum  base  rental  income  under  tenant  lease  agreements  relating to the
Properties having remaining lease terms ranging from one to 33 years at December
31, 1998 is as follows (dollars amounts in thousands):


Year Ending December 31st:
====================================
      1999                   $ 8,258
      2000                     6,597
      2001                     5,307
      2002                     4,276
      2003                     3,495
   Thereafter                  8,658
                               -----
      Total                 $ 36,591
                            ========
----------------- ------------------

For the  years  ended  December  31,  1998,  1997 and  1996,  no  tenant  at any
individual  property accounted for more than 10% of the Company's total revenue.
However,  the total  revenue  from K- mart  Corporation's  nine  leases with the
Company  accounted  for  approximately  29%, 32% and 30%,  respectively,  of the
Company's aggregate rent revenue.

As Lessee

Minimum  rental  expense under the Master  Leases,  having  original lease terms
ranging from 1998 to 2016, at December 31, 1998 is as follows (dollar amounts in
thousands):


Year Ending December 31st:
====================================
      1999                   $ 7,535
      2000                     2,370
      2001                     2,370
      2002                     2,370
      2003                     2,370
   Thereafter                 28,546
                              ------
      Total                 $ 45,561
                            ========
----------------- ------------------
Although the Company's  lease  payments are not  contingent  upon receiving rent
from the  Properties,  such  payments are expected to be made from such receipts
and the receipt of interest and principal payments from the Wraparound Notes.

<PAGE>

On  December  31,  1998,  the Master  Lease on the  property  located in Quincy,
Illinois  (the  "Quincy  Property")  expired.  As a result of such Master  Lease
expiration,  the Company, as the tenant under such Master Lease, assigned all of
its  rights,  title  and  interests  in the  Quincy  Property  to  Quincy  Plaza
Associates,  the landlord  under such Master  Lease and Quincy Plaza  Associates
assumed all of the Company's related obligations under such Master Lease.

On December  31,  1998,  the Master  Lease on the  property  located in Natchez,
Mississippi (the "Natchez  Property")  expired. As a result of such Master Lease
expiration,  the Company, as the tenant under such Master Lease, assigned all of
its  rights,  title and  interests in the  Natchez  Property  to Quincy II Plaza
Associates, the landlord under such Master Lease and Quincy II Plaza Associates,
assumed all of the Company's related obligations under such Master Lease.

The expiration  dates of the remaining 23 Master Leases range from December 1999
to December  2016,  of which 15 Master  Leases are due to expire on December 31,
1999, (the "Expiring Master Leases"). As a result of the Expiring Master Leases,
the Company, as the tenant under such Expiring Master Leases, may (i) assign all
of its rights, title and interests in the Underlying  Properties  subject to the
respective Expiring Master Leases to the Partnership, that is the landlord under
the Expiring Master Leases and such  Partnership may assume all of the Company's
related  obligations  under the  respective  Expiring  Master Leases or (ii) may
extend such Expiring Master Leases.

8.     Mortgages and Notes Payable

The  mortgages  and  notes  payable  are  non-recourse  to the  Company  and are
collateralized  by the  Properties.  The  scheduled  principal  payments  of the
mortgages and notes payable at December 31, 1998 are as follows  (dollar amounts
in thousands):


Year Ending December 31st:
====================================
      1999                   $ 5,783
      2000                     2,268
      2001                     2,493
      2002                     3,872
      2003                     2,773
   Thereafter                 30,788
                              ------
      Total                 $ 47,977
                            ========
----------------- ------------------

The interest rates on the mortgages and notes payable range from 5.75% to 13.5%.
The  mortgage and notes  payable and related  terms at December 31, 1998 for the
Properties are  summarized as follows  (dollar  amounts in thousands,  except as
noted):

                                                       F-21

<PAGE>

<TABLE>
<CAPTION>
                        Principal                     Monthly Payment                 
                        Balance at      Interest     Provisions (Actual   Maturity
      Location           12/31/98       Rate (%)          Dollars)        Date (2)
====================  ============== =============== ================== =============
<S>                             <C>            <C>              <C>            <C>    
Deland, FL                      $837           8.875            $14,016        4/1/03
Rochester, NY                  1,068           9.250             15,992        1/1/02
Janesville, WI                   907            9.00             14,060       7/31/02
                                 110            9.00              1,529        8/1/07
Marietta, OH                   1,900     5.75 - 6.70                (1)       3/15/07
Mt. Pleasant, PA               1,275     6.50 - 6.80                (1)        5/1/07
No. Canton, OH                 2,049            9.00             21,669       9/30/12
Owensboro, KY                  1,520     6.50 - 6.80                (1)       12/1/07
Quincy, IL                     2,910            7.75             27,912        7/1/98
Natchez, MS                    2,191            7.59             15,519        5/1/08
Streetsboro, OH                1,285     6.35 - 6.70                (1)       12/1/06
Sandy, PA                      1,395            7.00                (1)       12/1/06
Franklin, PA                   1,385            6.00                (1)      12/15/07
Clarksville, TN                1,450      6.00 -6.80                (1)       10/1/06
Montgomery, AL                 1,213            8.75             14,500        4/1/07
Paris, TN                        563           13.50              8,859        4/1/08
                                 356            9.25              8,467        7/1/03
Savannah, TN                     273            9.50              6,612       1/31/03
Danville, IL                     402           9.625              9,663        9/1/02
Warsaw, VA                       787          13.125             11,373       10/1/09
Southwick, MA                    764           11.50              9,857        9/1/09
Walpole, NH                      764           11.50              9,857        9/1/09
Baton Rouge, LA                1,902           12.00             33,583       12/1/05
Sunrise, FL                    1,155            7.48              8,095        5/1/08
Jacksonville, FL               1,833            7.87             13,335        5/1/08
Orange Park, FL                1,294            7.39              8,992        4/1/08
Boca Raton, FL                 1,795            7.39             12,450        7/1/08
West Palm Beach, FL              879            7.51              6,159        9/1/08
Jacksonville, FL               3,947            8.00             28,984       10/1/08
Ft. Lauderdale, FL             2,398            7.00             15,967      11/11/08
Davie, FL                      3,219            7.58             22,684       11/1/08
Palatka, FL                    1,130           12.00             17,247       11/1/07
Columbus, NE                   1,317           12.00             17,201        9/1/10
                                  62            9.50                697        7/1/11
Hamilton, NY                     792          13.125             11,373       12/1/09
Zanesville, OH                   850            9.50             14,295       5/31/99
                                 ---
Total                        $47,977
--------------------  -------------- --------------- ------------------ -------------
</TABLE>



                                                       F-22

<PAGE>



       (1) Principal and interest are paid semi annually in accordance  with the
bond documents.

       (2)  Certain   mortgages  and  notes  contain   various  terms  regarding
prepayment penalties.

The following  schedule  represents a reconciliation  of the mortgages and notes
payable for the years ended December 31, 1998 and 1997:


                                            1998               1997
==================================== ================== ==================
Balance at January 1st                    $  67,739,564     $   74,425,216
Principal repayments                       (38,511,435)        (6,685,652)
Proceeds from loans                          18,749,000                 0
                                             ---------- -------------------
Balance at December 31st                   $ 47,977,129     $  67,739,564 
                                           ============     ==============
------------------------------------ ------------------ ------------------


9.     Capital Stock

The  authorized  capital stock of the Company  consists of 10,000,000  shares of
Common Stock and 10,000,000 shares of Series A Preferred Stock.

The shares of Common  Stock are  entitled  to one vote per  share.  The Series A
Preferred  Stock has limited voting rights.  The Series A Preferred  Stock has a
$10.00  liquidation  preference  and  has a  preferential  right  to  receive  a
quarterly  dividend  of $0.195  per share  before  dividends  can be paid on the
Common Stock.

On December 21, 1995, the conversion  ratio for the Series A Preferred Stock was
adjusted  to  provide  for the  receipt  of one share of Common  Stock  upon the
conversion of .91 shares of Series A Preferred Stock. Previously, the conversion
ratio was 1.6 shares of Series A Preferred  Stock for one share of Common Stock.
The new  conversion  ratio,  which was  effective  as of November  1, 1995,  was
determined  pursuant  to the  Certificate  of  Designations  for  the  Series  A
Preferred Stock, which required the adjustment to be made in connection with the
Distribution.

After  September  30,  1995,  holders of the Series A Preferred  Stock  having a
liquidation  preference of $10.00 per share,  were no longer entitled to receive
dividends on a cumulative basis.  Pursuant to the Certificate of Designations of
the Series A Preferred  Stock,  after such date, no cash dividend may be paid on
the Common  Stock unless full  dividends of $0.195 per share on all  outstanding
shares  of Series A  Preferred  Stock for the then  current  quarterly  dividend
period are declared and either paid or sufficient  sums for the payment  thereof
are set apart. As a result of Milestone's Board of Directors'  determination not
to declare a dividend for the quarter  ended June 30, 1997,  which was the sixth
consecutive  quarter for which no dividend was  declared,  the number of persons
entitled to serve as directors on  Milestone's  Board of Directors was increased
by one, and the holders of the Series A Preferred Stock, who, at that date, only
elected one member of the Board of  Directors,  were  entitled to elect a second
member of the Board of Directors to fill such newly  created  directorship.  Any
decision as to the future  payment of dividends on the Series A Preferred  Stock
will depend on the results of  operations  and the  financial  condition  of the
Company  and such  other  factors  as  Milestone's  Board of  Directors,  in its
discretion, deems relevant.


                                                       F-23

<PAGE>



Milestone's  Board of  Directors  determined  not declare any  dividends  on the
Series A Preferred  Stock for the years ended  December  31, 1998 and 1997.  The
last  dividend  declared by the Company was for the quarter  ended  December 31,
1995 and was paid on February 15, 1996 at $0.195 per share of Series A Preferred
Stock.

In May 1994, the Common Stockholders  approved the adoption of the 1993 Employee
Stock Option Plan (the "Employee Stock Option Plan"). The total number of shares
of Common Stock which may be issued  pursuant to the exercise of options granted
under the Employee Stock Option Plan is 300,000.  The Compensation  Committee of
the Board of Directors  (the  "Compensation  Committee")  made initial grants in
December 1993 under such plan  totaling  146,000  options (the "Initial  Grant")
which  are  exercisable  for  146,000  shares of  Common  Stock at a per  option
exercise price of $4.75. In June 1997, the Compensation  Committee  canceled the
Original Issue and reissued  146,000  options which are  exercisable for 146,000
share of Common Stock at a per option exercise price of $0.50. At the same time,
the  Compensation  Committee  granted  154,000 option which are  exercisable for
154,000 shares of Common Stock at a per option exercise price of $0.50.  Options
granted under the Employee Stock Option Plan expire on the tenth  anniversary of
the date of their grant,  or upon  termination of the grantee's  employment with
the Company.  During the years ended  December 31,  1998,  1997 and 1996,  zero,
23,800 and zero such  options were  canceled  upon  resignation  of an employee,
respectively.

In May 1994,  the Common  Stockholders  also  approved  the adoption of the 1993
Non-Employee Director Stock Option Plan (the "Non-Employee Director Stock Option
Plan").  Options granted under such plan expire on the tenth  anniversary of the
date of their grant, or upon the grantee's removal or resignation from the Board
of Directors.  The exercise price for each option granted under the Non-Employee
Director  Stock Option Plan is  determined be averaging the high and low trading
prices of the Common  Stock as  reported  on either the New York Stock  Exchange
(through September 10, 1998) or the  Over-The-Counter  Bulletin Board (effective
September 11, 1998) on the date of such options. Under the Non-Employee Director
Stock  Option  Plan,  the Company  granted  2,500  options to each  non-employee
director in each of 1993 (upon adoption of the plan), 1994, 1995, 1996 and 1997,
at a per option  exercise  price of $4.75,  $4.375,  $1.375,  $1.6875 and $0.50,
respectively.  As of December 31, 1998, all of the non-employee director options
granted in 1993 though 1996 are  exercisable and one half of the options granted
in 1997 are exercisable.  Pursuant to such plan, each non-employee  director was
granted  2,500  options upon  adoption of such plan in 1994 and is granted 2,500
options at each annual meeting of the  stockholders  of the Company.  No options
were  granted  to the  non-employee  directors  in 1998 due to the fact  that an
annual  meeting of the  stockholders  of the Company  was not held in 1998.  The
impact on earnings  of the fair value of the options  granted to has been deemed
insignificant.



                                                       F-24

<PAGE>



In October 1995, the Financial  Accounting  Standards Board issued  Statement of
Financial   Accounting   Standards   No.  123,   "Accounting   for  Stock  Based
Compensation"  ("SFAS" No. 123"). SFAS No. 123 requires  expanded  disclosure of
stock based compensation  arrangements with employees, and encourages,  but does
not require  compensation cost be measured based on the fair value of the equity
instrument  awarded.  Companies  are  permitted to continue to apply  Accounting
Principles Board Opinion No. 25 ("APB 25"), which recognizes  compensation  cost
based on the intrinsic value of the equity instrument awarded.  The Company will
continue to apply APB 25 to its stock based compensation awards. Accordingly, no
compensation  costs  related to employee  options  have been  recognized  in the
consolidated financial statements of the Company.

No options were  exercised  and no options  were granted  during the years ended
December 31, 1998.  The pro form  disclosure  provisions of SFAS No. 123 for the
year ended December 31, 1998, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>

                                                        1998                  1997                  1996
============================ ================= ======================  ==================  ======================
<S>                                                   <C>                 <C>                     <C>            
Net Loss                     As Reported              $   (8,431,112)     $   (3,430,731)         $   (2,486,974)
                             Pro Forma                    (8,460,946)         (3,443,748)             (2,486,974)
Loss per Common Share        As Reported                   $   (1.99)          $   (0.82)              $   (0.65)
                             Pro Forma                         (1.93)              (0.79)                  (0.65)
---------------------------- ----------------- ----------------------  ------------------  ----------------------
</TABLE>

For the purposes of providing pro forma  disclosures,  the fair value of options
granted in 1997 were  estimated  using the Black Scholes  options  pricing model
with the following weighted average assumption; (i) a risk free interest rate of
5.06%, (ii) an expected life of one year, (iii) volatility of 52.20% and (iv) no
dividends. The estimated fair value compensation cost of the related options was
amortized to expense over the options' vesting period.

Certain information relating to the options under the Employee Stock Option Plan
and the Non- Employee Director Stock Option Plan during the years ended December
31, 1998, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
                                               1998                             1997                            1996
                                  ==============================  ================================ ==============================
                                    Number         Weighted          Number          Weighted        Number         Weighted
                                      of            Average            of            Average           of            Average
                                    Options     Exercise Price       Options      Exercise Price     Options     Exercise Price
================================= ===========  =================  ============= ================== ===========  =================
<S>                                   <C>               <C>             <C>               <C>          <C>               <C>     
Outstanding at January 1st            313,700           $   0.74        176,000           $   4.46     168,500           $   4.58
Granted                                     0                n/a        307,500               0.50       7,500             1.6875
Exercised                                   0                n/a              0                n/a           0                n/a
Forfeited                                   0                n/a      (169,800)               4.15           0                n/a
                                  -----------                         ---------                    -----------
Outstanding at December 31st          313,700             $ 0.74        313,700             $ 0.74     176,000             $ 4.46
                                      =======                           =======                        =======
Options exercised at December 31st          0                                 0                              0
--------------------------------- -----------  -----------------  ------------- ------------------ -----------  -----------------
</TABLE>



                                                             F-25

<PAGE>



10.    Income Taxes

The provision for income taxes for the years ended  December 31, 1998,  1997 and
1996 are as follows:
<TABLE>
<CAPTION>

                                                       1998              1997              1996
=============================================== ================== ================= ================
Current Tax:
<S>                                                          <C>               <C>        <C>        
Federal                                                      $   0             $   0      $   524,317
State and Other                                            188,768            64,245          123,069
                                                           -------            ------          -------
Total Current Tax                                          188,768            64,245          647,386
Deferred Tax:
Federal                                                    904,645         (667,657)         (11,894)
State and Other                                            159,643         (117,822)        (269,054)
                                                           -------         ---------        ---------
Total Deferred Tax                                       1,064,288         (785,479)        (280,948)
                                                         ---------         ---------        ---------
Total provision (benefit) for income taxes             $ 1,253,056     $   (721,234)    $    366,438 
                                                       ===========     =============    =============
----------------------------------------------- ------------------ ----------------- ----------------
</TABLE>

Temporary differences between the amount reported in the consolidated  financial
statements  and the tax basis of assets  and  liabilities  results  in  deferred
taxes. There was a change in the valuation  allowance for deferred tax assets of
$4,953,862  and  $(340,576)  for the years  ended  December  31,  1998 and 1997,
respectively.  Realization  of the deferred tax asset is dependent,  in part, on
generating sufficient taxable income in the future. Although such realization is
not  assured,  the  Company  believes  that it is more  likely than not that the
deferred tax asset not allowanced will be recognized. Should estimates of future
taxable income be reduced the deferred tax asset  valuation  allowance  would be
adjusted accordingly.  The Company has a tax net operating loss carry forward of
approximately  $13,905,000  at  December  31,  1998.  Deferred  tax  assets  and
liabilities at December 31, 1998, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>

                                                                     1998              1997              1996
============================================================== ================= ================= =================
Deferred Tax Assets:
<S>                                                                  <C>             <C>               <C>          
Acquisition Costs                                                    $   880,345     $   1,025,222     $   1,078,538
Unrealized holding loss on U.S. Treasury Notes, sold short                     0                 0           517,553
Principal amortization on Wraparound Notes                             1,408,957         2,000,385         2,210,868
Unrealized holding loss on Available-for-Sale securities                       0                 0           146,531
Allowance on Wraparound Notes                                          1,380,811         1,380,811           344,758
Net Operating Loss Carryforward                                        4,953,862                 0                 0
Other                                                                    613,697           880,897          421,409
                                                                         -------           -------          -------
Gross Deferred Tax Assets                                              9,237,672         5,287,315         4,719,657
Less: Valuation Allowance                                             (5,968,862)       (1,015,000)       (1,355,576)
                                                                     -----------       -----------       -----------
Deferred Tax Asset, net of valuation allowance                         3,268,810         4,272,315        3,364,081
                                                                       ---------         ---------        ---------
Deferred Tax Liabilities:
Accelerated depreciation                                                 274,740           213,957            91,208
                                                                         -------           -------            ------
Gross deferred tax liabilities                                           274,740           213,957            91,208
                                                                         -------           -------            ------
Net deferred tax asset                                               $ 2,994,070       $ 4,058,358       $ 3,272,873
                                                                      ==========        ==========        ==========
-------------------------------------------------------------- ----------------- ----------------- -----------------
</TABLE>



                                                       F-26

<PAGE>



The  provision  (benefit)  for income tax  differs  from the amount  obtained by
applying  the  statutory  federal  income  tax rate to  pre-tax  losses  for the
following reasons:

<TABLE>
<CAPTION>

                                                                              1998         1997        1996
========================================================================= ============  =========== ===========
<S>                                                                            <C>          <C>         <C>    
Amount computed on pre-tax income                                              (35.0)%      (35.0)%     (35.0)%
Increase (decrease) in taxes:
From State and other taxes net of Federal tax benefit                              4.6          2.1       (5.2)
Valuation allowance                                                               60.4         15.5        55.9
Basis difference on asset dispositions                                          (10.6)          0.0         0.0
Deferred tax adjustments                                                         (1.8)          0.0         0.0
Other                                                                            (0.3)          0.0         0.0
Total                                                                          17.3%        (17.4)%     17.3%  
                                                                               =======      =======     =======
------------------------------------------------------------------------- ------------  ----------- -----------
</TABLE>

11.    Fair Value of Financial Instruments

The  following  estimated  fair values  were  determined  by the  Company  using
available market information and valuation methodologies  considered appropriate
by  management.  However,  considerable  judgement is necessary to interpret and
apply market data to develop  specific fair value  estimates for given financial
instruments,  and the use of  different  market  assumptions  and/or  estimation
methodologies  could  have a material  effect on  reported  fair value  amounts.
Accordingly,  the estimates  presented herein are not necessarily  indicative of
the amounts that could be realized upon  disposition of the Company's  financial
instruments.

Cash and cash  equivalents,  accounts and loan  receivables and accounts payable
and accrued expenses are reflected in the consolidated balance sheets at amounts
considered by management to reasonably approximate fair value due to their short
term nature.  The Company  estimates  the fair value of its long term fixed rate
mortgage  loans  generally  using  discounted  cash flow  analysis  based on the
Company's  current  borrowing  rates for similar  types of debt. At December 31,
1998 and 1997,  the carrying  value of the notes and  mortgages  payable and the
fair value of such instruments was not considered to be significantly different.

The fair value of the Wraparound Notes has been estimated by management based on
the estimated fair value of the Underlying Properties.  At December 31, 1998 and
1997, the fair value of the Wraparound Notes was estimated to be $62,802,981 and
$65,997,009, compared to a carrying value amount of $39,529,787 and $59,402,931,
respectively.

For the investment in Kranzco Series C Cumulative  Redeemable  Preferred  Shares
the estimate fair value,  which  approximates  carrying amount,  is based on the
applicable  mandatory  redemption  price and the dividend  interest rates and is
evaluated using interest rates currently offered on like securities with similar
remaining maturities.



                                                       F-27

<PAGE>



The fair value estimates presented herein are based on information  available as
of December 31, 1998 and 1997.  Although  management is not aware of any factors
that  would   significantly   affect  the  estimated  fair  value   amounts,   a
comprehensive  re-evaluation  has not  been  performed  for  purposes  of  these
financial  statement  disclosures and current estimates of fair value may differ
significantly from the amount presented herein.

12.    Related Party Transactions

The Company is party to a management agreement (the "Management Agreement") with
Concord pursuant to which the Company provides management  services,  assists in
the  management of Concord  properties,  provides  certain  personnel and office
space  and  general  office  services  to  Concord  which the  Company  receives
reimbursements from Concord. The Management Agreement is renewable annually. For
the years ended  December 31,  1998,  1997 and 1996  reimbursed  expenses to the
Company were $215,684, $338,394 and $420,743, respectively.

As of December  31, 1998 and 1997,  the Company had  recorded  receivables  from
Concord of $598,765 and  $391,851,  respectively.  Such  receivables  consist of
management  fees due to the Company and expenses for general office  services as
well as salary reimbursements.

Concord is wholly owned by Leonard S. Mandor and Robert A. Mandor,  both of whom
are  executive  officers and  directors of Concord and the Company,  and both of
whom may be deemed to beneficially  own more than a majority of the voting stock
of the Company.

Concord  beneficially owns 2,901,098 shares of Common Stock at December 31, 1998
and 1997. The wholly owned  subsidiaries of Concord own 2,698,765 shares and the
two  limited  partnerships,  which are the sole  general  partners of the wholly
owned subsidiaries of Concord, own 202,333 shares at December 31, 1998 and 1997.

In addition, the Company received property management fees of $132,388, $107,725
and $107,007 during 1998, 1997 and 1996, respectively,  from a partnership whose
general partner is an affiliate of the Company.

In connection  with the UPI Merger,  UPI terminated its property  management and
management services agreements with the Company. The Company does not expect the
termination  of these  agreements  to have a  materially  adverse  effect on the
operations or financial condition of the Company.  The aggregate annual fee paid
by UPI to the Company under these  agreements  for the years ended  December 31,
1998, 1997 and 1996 were $0, $108,588 and $1,235,831, respectively.



                                                       F-28

<PAGE>



13.    Commitments and Contingent Liabilities

The  Company's  office  facility  in  Boca  Raton,   Florida  is  subject  to  a
noncancellable  five year operating lease agreement  commencing  January 1, 1998
and expiring  December 31, 2002.  Aggregate  annual rental payments for the year
ended December 31, 1998,  1997 and 1996 for the Company were $176,374,  $758,193
and  $752,344,   respectively.   Future  minimum   annual   payments  under  the
noncancellable  operating  lease  agreement,  as of December  31,  1998,  are as
follows:


Year Ending December 31st:
=====================================
       1999                   183,479
       2000                   190,805
       2001                   198,421
       2002                   206,358
                              -------
      Total                 $ 779,063
                            =========
------------------  -----------------

Under a long term  incentive  bonus  plan,  the  Company  has  accrued  zero and
$669,460 for bonuses to be paid to certain officers  relating to the years ended
December 31, 1998 and 1997,  respectively.  The Company has accrued  performance
related  bonuses to certain  executive  officers in the amount of  $486,041  and
$426,870 for the years ended December 31, 1998 and 1997, respectively.

The Company has accrued for litigation  expenses and settlement fees relating to
a class  action  and  derivative  lawsuit  brought  against  the  Company.  Such
settlement  requires,  among other  things,  (i) the payment of $3.00 in cash in
exchange  for each  eligible  share of Series A Preferred  Stock  required to be
surrendered as of the close of business on March 5, 1999 and (ii) the plaintiffs
attorney  fees  not to  exceed  $750,000.  See note 14.  Legal  Proceedings  for
additional information regarding the class action and derivative lawsuit.

Under  various  federal,  state and local  environmental  laws,  ordinances  and
regulations,  the  Company,  as a current or previous  owner or operator of real
property,  may be held liable for the costs of removal or remediation of certain
hazardous    or    toxic    substances,    including,    without    limitations,
asbestos-containing  materials,  that  could be  located  on,  in or under  such
property.  Such laws and regulations  often impose liability  whether or not the
owner or operator knew of, or was responsible for, the presence of the hazardous
or toxic substances.  The costs of any required  remediation or removal of these
substances  could be  substantial  and the  Company's  liability  as an owner or
operator  as to any  property  is  generally  not  limited  under  such laws and
regulations,  and could exceed the property's value and the Company's  aggregate
assets.  The Company's ability to sell or rent a property,  or to borrow using a
property  as  collateral  may be  adversely  affected  by the  presence of these
substances or failure to remediate such  substances  properly.  Under these laws
and regulations,  the Company, as an owner, operator, or any entity who arranges
for the disposal of hazardous or toxic substances,  such as  asbestos-containing
materials,  at a disposal site,  may also be liable for these costs,  as well as
certain  other costs,  including  governmental  fines and injuries to persons or
properties.  To date,  the  Company,  has not  incurred  any costs of removal or
remediation of such hazardous or toxic substances.  However, the presence,  with
or without the  Company's  knowledge,  of hazardous or toxic  substances  at any
property held or operated by the Company,  could adversely  affect the Company's
business, operating results and financial condition. The Company is not aware

                                                       F-29

<PAGE>



of any  environmental  conditions  at any of the  properties  that it owns or in
which it has an investment.

14.    Legal Proceedings

During  1996  Milestone,  certain  past  and  present  members  of its  Board of
Directors,  executive  officers,  and  Concord  were  named as  defendants  in a
purported class action and derivative lawsuit (the "Winston Actions")  commenced
in the Court of Chancery of the State of Delaware (the "Delaware Court"). In the
actions, the plaintiff, a Series A Preferred Stockholder purporting to bring the
action on behalf of  himself,  all other  Series A  Preferred  Stockholders  and
derivatively  on  behalf  of  Milestone,  alleged  that in  connection  with the
Acquisition and certain related transactions (collectively, the "Transactions"),
Milestone and its directors engaged in self-dealing, violated federal securities
laws and an injunction  against such  violations  and breached  their  fiduciary
duties to the Series A Preferred  Stockholders.  The  plaintiff  claimed,  among
other things,  that, as a result of the  Transactions,  Milestone would not have
sufficient  funds to pay dividends on the Series A Preferred  Stock and that the
properties  which  were not  transferred  to UPI in the  Transfer  were  grossly
inferior to the properties that were transferred to UPI.

         On August 5, 1998,  the counsel for the named  plaintiff in the Winston
Actions  and the counsel  for the  defendants  entered  into a  Stipulation  and
Agreement of Settlement (the "Winston Settlement  Agreement") which memorialized
the terms of a settlement (the "Winston  Settlement") of the Winston Actions. On
January 28, 1999, the Delaware Court approved the Winston Settlement  Agreement,
which  approval  became final  effective as of the close of business on March 5,
1999.  At such time,  (i) the shares of Series A  Preferred  Stock owned by each
Series A Preferred  Stockholder  who was eligible to  participate in the Winston
Settlement  and who did not properly opt out of the Winston  Settlement  and who
owned shares of Series A Preferred Stock as of the close of business on March 5,
1999 were  canceled  and  represented  only the right of such Series A Preferred
Stockholder  to receive $3.00 in cash from the Company in exchange for each such
share;  (ii) the  holders  of shares of the  Series A  Preferred  Stock  between
October 23, 1995 and the close of business on March 5, 1999, other than Series A
Preferred  Stockholders  who  properly  opted  out  of  the  Winston  Settlement
Agreement or who were precluded from  participating  in the Winston  Settlement,
released  any and all claims they may have had against the Company and the other
named  defendants  in  connection  with  the  Transactions;   (iii)  Milestone's
stockholders  other than Series A Preferred  Stockholders  who were  eligible to
participate in the Winston  Settlement and who properly opted out of the Winston
Settlement  released all derivative  claims in connection with the Transactions;
and (iv) the Winston  Actions were  dismissed.  In  connection  with the Winston
Actions,  the Company  retained  counsel for all of the  defendants  (including,
without  limitation,  Leonard S.  Mandor,  Robert A.  Mandor,  Harvey  Jacobson,
Gregory McMahon and Geoffrey Aaronson (each of whom is a director and/or officer
of the  Company)) and assumed  responsibility  for the payment of all legal fees
incurred by such persons in connection  with the Winston Actions and the Winston
Settlement (subject to the insurance coverage litigation described below).

         The foregoing  description  of the Winston  Settlement  and the Winston
Settlement  Agreement  is  qualified in its entirety by reference to the Winston
Settlement  Agreement,  a copy of  which  was  filed  by the  Company  with  the
Commission on August 14, 1998 as Exhibit 10.01 to Quarterly  Report on Form 10-Q
for the quarterly period ended June 30, 1998.

                                                       F-30

<PAGE>



         The Company  maintains a directors  and officers  insurance and company
reimbursement  policy (the  "National  Policy")  issued by  National  Union Fire
Insurance Company of Pittsburgh,  PA ("National  Union") with a $2,000,000 limit
and an excess directors and officers liability and company  reimbursement policy
(the "Stonewall  Policy") issued by Stonewall  Surplus Lines Insurance  Company,
now known as American  Dynasty  Surplus Lines Insurance  Company  ("Stonewall"),
with a $2,000,000  limit.  The Company  believes that the amounts that it has to
pay  pursuant  to the  Winston  Settlement  and in  connection  with the Winston
Actions  are  covered  losses  under  both the  National  Union  Policy  and the
Stonewall  Policy.  In addition,  the Company  believes  that the legal fees and
other  expenses  incurred by the Company and the other  defendants in connection
with the Winston Actions are also covered losses under the National Union Policy
and the Stonewall Policy.  In connection with a previous proposed  settlement of
the Winston  Actions which was never  consummated,  National Union and Stonewall
both refused to  contribute  to such proposed  settlement,  asserting  that such
proposed  settlement  did not  encompass  any  covered  loss (as  defined in the
National Policy and the Stonewall  Policy,  respectively).  On January 29, 1998,
the Company  commenced  a lawsuit in the United  States  District  Court for the
Southern District of New York against National Union and Stonewall in connection
with such refusal to contribute to such proposed  settlement.  In the complaint,
the plaintiffs  alleged that National Union and Stonewall  wrongfully  failed to
contribute to the proposed  settlement  and sought  reimbursement  from National
Union and  Stonewall  up to the limits of their  respective  policies.  National
Union and  Stonewall  both answered the  complaint  and denied  liability.  As a
result of the termination of the previously proposed settlement,  the Company on
one hand, and Stonewall and National Union, on the other hand, agreed to dismiss
such action  without  prejudice and such action was dismissed on May 29, 1998 by
the United  States  District  Court for the Southern  District of New York.  The
Company gave both National Union and Stonewall notice of the Winston  Settlement
and  provided  each of them with a copy of the Winston  Settlement  Agreement on
August 12, 1998.  National Union and Stonewall  reviewed the Winston  Settlement
Agreement and separately informed the Company that their basic position, denying
coverage, had not changed. On February 12, 1999, the Company commenced a lawsuit
in the Circuit  Court for the Fifteenth  Judicial  Circuit in and for Palm Beach
County, Florida against both National Union and Stonewall alleging,  among other
things,  that National Union and Stonewall have wrongfully refused to contribute
to the  Winston  Settlement and seeking  reimbursement  from National Union
and  Stonewall  up to the  limits  of their  respective  policies.  The  initial
complaint in the new lawsuit was served on each of National  Union and Stonewall
on  February  12,  1999  and on March  17,  1999 the  Company  filed an  amended
complaint,  which, among other things, added the other defendants to the Winston
Actions as plaintiffs. National Union and Stonewall have until March 29, 1999 to
answer the amended  complaint.  In connection with this action,  the Company has
retained  counsel for all of the plaintiffs and is assuming  responsibility  for
the payment of all legal fees incurred by such persons in  connection  with this
action.  At this time,  the Company is not in a position to render an opinion as
to the outcome of this action.

15.      Subsequent Events

On January 28, 1999 the Delaware Court  approved the Winston  Settlement at a
hearing held for such purpose. The order of the Delaware Court became final upon
expiration  of a 30 day appeal  period which began on February 3, 1999,  the day
the Court's order was entered upon the Court's docket,  and expired at the close
of business on March 5, 1999.


                                                       F-31

<PAGE>



At the close of  business  on March 5,  1999,  Milestone  canceled  and  retired
2,983,284 shares of its Series A Preferred Stock, representing approximately 99%
of the then  outstanding  shares of Series A  Preferred  Stock,  pursuant to the
terms of the Winston  Settlement.

As a result of the Winston Settlement,  the Company is
required to reserve approximately  $9,000,000 with a court appointed trustee for
twelve months. On March 18, 1999 the Company wired  approximately  $9,000,000 to
such court appointed trustee to be held for the benefit of the plaintiffs.

     See note 14. Legal  Proceedings,  for a  description  of the court  Winston
Actions and the Winston Settlement.

16.      Consolidated Quarterly Summary of Operations

The  following  is a  summary  of  financial  information  with  respect  to the
Company's operations for the four fiscal quarters during fiscal year 1998:

<TABLE>
<CAPTION>

                                                        Fourth                Third            Second            First
                                                        Quarter              Quarter          Quarter           Quarter
================================================== ================= ===  ==============  ================  ===============
<S>                                                      <C>                  <C>               <C>            <C>         
Total revenues                                           $ 8,094,090   a      $6,331,620        $5,429,905     $  5,659,776
Total expenses                                           12,719,360    b      6,327,988         6,964,991        6,681,108
                                                         -----------          ----------        ----------       ---------
(Loss) income before income taxes                        (4,625,270)               3,632       (1,535,086)      (1,021,332)
Provision (benefit) for income taxes                      2,606,499            (367,821)         (498,584)        (487,038)
                                                          ----------           ---------         ---------        ---------
Net (loss) income                                      $ (7,231,769)        $   371,453       $(1,036,502)     $  (534,294)
                                                       =============        ============      ============     ============
Net (loss) income per common share                        $   (1.71)           $   0.09         $   (0.25)       $   (0.13)
                                                         ===========           =========        ==========       ==========
Weighted average common shares outstanding                 4,235,245           4,230,245         4,225,727        4,213,368
                                                           =========           =========         =========        =========
-------------------------------------------------- ----------------- ---  --------------  ----------------  ---------------
</TABLE>

Note: 
     (a) Includes  approximately  $4,251,000  of gain on sale of real estate and
real estate related assets.

     (b)  Includes  approximately   $7,084,000  of  accrued  litigation  expense
directly related to the Winston  Settlement See Item 14. Legal Proceedings for a
description of the Winston Action and the Winston Settlement.


                                                        F-33

<PAGE>



                                    MILESTONE PROPERTIES, INC. AND SUBSIDIARIES

                                                    SCHEDULE III
                                      Real Estate and Accumulated Depreciation
                                                 December 31, 1998
<TABLE>
<CAPTION>

                                                                      Cost of                    Accumulated   Date     Depreciation
           Location        Encumbrances     Land       Building     Improvements     Total      Depreciation   Acquired       Life
======================= ================== =========== ============ ============ ============= ============== ========== ===========
Pine Oak Plaza,                                                                                                                    
<S>                          <C>           <C>          <C>          <C>           <C>          <C>            <C>             <C>
Sunrise, FL                  $   1,155,466 $   110,000  $   990,000  $   49,845    $1,149,845   $   (36,976)   9/24/97         50
Regency Walk,                                                                                                                     
Jacksonville, FL                 1,832,595     215,000    1,935,000      68,847     2,218,847       (36,937)   4/01/98         50
Orange Park,                                                                                                                      
Orange Park, FL                  1,294,056     150,000    1,350,000           0     1,500,000       (20,250)   4/17/98         50
Teeca Plaza,                                                                                                                      
Boca Raton, FL                   1,795,235     207,500    1,867,500     103,823     2,178,823       (39,440)   7/15/98         50
Country Grove Plaza,                                                                                                              
W. Palm Beach, FL                  878,877     110,000      990,000           0     1,100,000        (6,600)   9/11/98         50
Mandarin Central,                                                                                                                 
Jacksonville, FL                 3,947,350     465,000    4,185,000           0     4,650,000       (20,925)  10/13/98         50
Pine Crest,                                                                                                                       
Ft. Lauderdale, FL               2,398,033     320,000    2,880,000           0     3,200,000       (14,400)  10/27/98         50
Lincoln Park,                                                                                                                     
Davie, FL                        3,219,000     384,000    3,456,000           0     3,840,000       (11,520)  11/10/98         50
Sunrise Shopping Center                                                                                                           
Zanesville, OH                     850,193           0    2,530,219     120,463     2,650,682    (1,096,709)  10/23/95         50
Family Dollar Stores,                                                                                                             
Blackstone, VA                           0           0      794,909       8,607       803,516      (595,293)  10/23/95      26.65
Totals                        $ 17,370,805 $ 1,961,500 $ 20,978,628   $ 351,585   $23,291,713  $ (1,879,050)
                              ============ =========== ============   =========   ===========  =============
----------------------- ------------------ ----------- ------------ ----------- ------------- -------------- ---------  ---------
</TABLE>


                                                        S-1

<PAGE>


                   MILESTONE PROPERTIES, INC. AND SUBSIDIARIES

                                  SCHEDULE III
                    Real Estate and Accumulated Depreciation
                                December 31, 1998


Reconciliation of Property and Improvements:


                                  1998              1997              1996
==================== ================= ================= =================
Beginning Balance          $25,546,306       $24,268,310       $24,221,311
Acquisitions                18,515,000         1,100,000                 0
Improvements                   351,585           177,996            46,999
Dispositions              (21,121,178)                 0                 0
                          ------------ -----------------------------------
Ending Balance           $23,291,713         $25,546,306       $24,268,310
                         =============       ===========       ===========
-------------------- ----------------- ----------------- -----------------


Reconciliation of Accumulated Depreciation:


                                  1998              1997              1996
====================== ================= ================= =================
Beginning Balance             $6,065,951        $5,545,018        $5,063,178
Depreciation expense             492,686           520,933           481,840
Dispositions                 (4,679,587)                 0                 0
                             ----------- -----------------------------------
Ending Balance               $1,879,050         $6,065,951        $5,545,018
                             ===========        ==========        ==========
---------------------- ----------------- ----------------- -----------------


At  December  31,  1998,  the tax basis of the  Company's  owned real estate was
approximately $22,616,000.



                                                        S-2