UNITED STATES SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549
                                    FORM 10-K

  X  ANNUAL REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE  SECURITIES  EXCHANGE
---- ACT OF 1934 (FEE REQUIRED)
     For the fiscal year ended December 31, 1999

     TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF THE  SECURITIES
     EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
     For the transition period from _____ to _____

                         Commission File Number 0-25230

                       FIRST WASHINGTON REALTY TRUST, INC.

             (Exact name of registrant as specified in its charter)

              Maryland                                                52-1879972
(State of Incorporation or Organization)                        (I.R.S. employer
                                                             identification no.)

4350 East-West Highway                                            (301) 907-7800
Suite 400                                                (Registrant's telephone
Bethesda, MD   20814                                number, including area code)
(Address of principal executive offices)

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

Title of Each Class                    Name of Each Exchange on Which Registered
-------------------                    -----------------------------------------
Common Stock, $.01 par value                      New York Stock Exchange

9.75% Series A Cumulative Participating Convertible Preferred
Stock Liquidation Preference of $25 per Share     New York Stock Exchange

Class B Junior Participating Preferred Stock
Purchase Rights                                   New York Stock Exchange

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

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

                                 Yes   X       No
                                     -----

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

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant  was  approximately  $190 million  based on the closing price of such
shares on the New York Stock Exchange as of March 27, 2000.

The number of shares of the Registrant's Common Stock outstanding was 10,057,847
on March 27, 2000.

                       DOCUMENTS INCORPORATED BY REFERENCE

Part III - Portions of the definitive  proxy statement for the Annual Meeting of
Shareholders  presently  scheduled  to be  held  on May 12,  2000,  to be  filed
pursuant to Regulation 14A.

This report including Exhibits, contains 55 pages.

<PAGE>


                       FIRST WASHINGTON REALTY TRUST, INC.
                         1999 ANNUAL REPORT ON FORM 10-K

                                TABLE OF CONTENTS



Item
 No.                                                                        Page
----                                                                        ----
                                     PART I

1.    Business...............................................................  1
2.    Properties.............................................................  7
3.    Legal Proceedings...................................................... 11
4.    Submission of Matters to a Vote of Security Holders.................... 11

                                     PART II

5.    Market for the Registrant's Common Equity and Related Shareholder
          Matters............................................................ 12
6.    Summary of Selected Financial Data..................................... 13
7.    Management's Discussion and Analysis of Financial Condition and
          Results of Operations.............................................. 15
7a.   Qualitative and Quantitative Disclosures About Market Risk............. 21
8.    Consolidated Financial Statements and Supplementary Data............... 22
9.    Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosures.......................................... 22

                                    PART III

10.   Directors and Executive Officers of the Company........................ 23
11.   Executive Compensation................................................. 23
12.   Security Ownership of Certain Beneficial Owners and Management......... 23
13.   Certain Relationships and Related Transactions......................... 23

                                     PART IV

14.   Exhibits, Financial Statement Schedules, and Reports on Form 8-K....... 23



<PAGE>



                                     PART I


ITEM 1.  BUSINESS (dollars in thousands)

General

         First  Washington  Realty  Trust,  Inc.  (the  "Company")  is  a  fully
integrated real estate  organization  with expertise in  acquisitions,  property
management,    leasing,    renovation    and    development    of    principally
supermarket-anchored neighborhood shopping centers. The Company currently owns a
portfolio of 62 retail properties (the "Retail  Properties")  containing a total
of approximately  6.7 million square feet of gross leasable area ("GLA") located
in the Mid-Atlantic  region and the Chicago,  Illinois and Milwaukee,  Wisconsin
metropolitan  areas.  The  Company  has  elected  to be taxed  as a real  estate
investment  trust ("REIT")  under the Internal  Revenue Code of 1986, as amended
(the "Code").

         The Retail Properties are strategically  located neighborhood  shopping
centers principally  anchored by well known tenants such as Giant Food, Safeway,
Shoppers Food Warehouse,  Food Lion, A&P Superfresh,  Winn Dixie,  Weis Markets,
Acme Market, Dominick's Supermarket,  Ukrops, CVS/Pharmacy,  Walgreen's, Borders
Books,  Eckerd Drug and Rite Aid.  Neighborhood  shopping  centers are typically
open-air  centers  ranging in size from 50,000 to 150,000 square feet of GLA and
anchored by supermarkets and/or drug stores. The Retail Properties range in size
from approximately 3,000 square feet of GLA to approximately 335,000 square feet
of GLA, and average approximately 108,000 square feet of GLA. The anchor tenants
typically offer daily necessity items rather than specialty  goods.  Nine of the
Retail  Properties  are relatively  small in size,  with less than 50,000 square
feet of GLA.  Such  properties  do not have a large  supermarket  or drug  store
anchor  tenant,  and as such may be subject to greater  variability  in consumer
traffic and operating performance.

Organization

         The  Company  was  formed in April  1994 to  continue  and  expand  the
neighborhood  shopping center acquisition,  management and renovation strategies
of First  Washington  Management,  Inc.  ("FWM"),  which has been engaged in the
business  since  1983.  FWM was  founded  by Stuart D.  Halpert,  the  Company's
Chairman  and William J. Wolfe,  the  Company's  President  and Chief  Executive
Officer (collectively the "Principals").

         The  Company's  assets  are held by, and all its  operations  conducted
through,   First   Washington   Realty  Limited   Partnership   (the  "Operating
Partnership")  and FWM. The Company is the sole general partner of the Operating
Partnership.  The limited partners are individuals,  partnerships and others who
have contributed their property in exchange for partnership interests ("Units").
The limited  partners may exchange their Units for cash or, at the option of the
Company,  for stock of the Company on a 1 for 1 basis.  As of December  31, 1999
and  1998,  the  Company  owned  approximately  74%  and  73% of  the  Operating
Partnership,  respectively.  This  arrangement  is  commonly  referred  to as an
Umbrella Partnership or "UPREIT" structure.  The Operating Partnership owns 100%
of the  non-voting  preferred  stock of FWM which entitles it to 99% of the cash
flow. Messrs. Halpert and Wolfe own 100% of the voting common stock of FWM which
entitles  them to 1% of the cash flow. In addition,  the  Operating  Partnership
holds an FWM  promissory  note in the  amount of $4,000  with  interest  payable
quarterly in the amount of $120.  FWM provides  management,  leasing and related
services to the  Operating  Partnership  and also  provides  such services to 11
third-party  clients  consisting of 21 properties and 1.8 million square feet of
GLA. As of  December  31,  1999,  the  Company  and the  Operating  Partnership,
including subsidiary entities, collectively owned 100% of the Retail Properties.
Due to the Company's ability, as the general partner, to exercise both financial
and  operational   control  over  the  Operating   Partnership,   the  Operating
Partnership is consolidated for financial reporting purposes.  Allocation of net
income and equity to the limited partners of the Operating  Partnership is based
on their respective  partnership  interests and is reflected in the accompanying
Consolidated Financial Statements as minority interests. Losses allocable to the
limited  partners  in  excess  of  their  basis  are  allocated  to  the  Common
Stockholders as the limited partners have no requirement to fund losses.

         The  Company  is  incorporated  in  the  State  of  Maryland  with  its
headquarters located at 4350 East-West Highway,  Suite 400, Bethesda,  Maryland.
The telephone  number is (301) 907-7800.  FWM has regional  property  management
offices located in Illinois, Pennsylvania and Virginia. FWM has approximately 75
employees.



                                        1

<PAGE>





Operating Strategies

         The Company seeks to increase cash flow and  distributions,  as well as
the value of its portfolio,  through intensive property management and strategic
renovation and expansion of its properties and the opportunistic  acquisition of
additional  neighborhood shopping centers within the Mid-Atlantic region and the
Chicago, Illinois and Milwaukee, Wisconsin metropolitan areas, where the Company
has extensive knowledge of local market growth patterns and economic conditions.
The Company would also consider acquisitions in other metropolitan markets which
management determines to be both attractive and conveniently accessible.

         Intensive  Management.  A key  aspect  of  the  Company's  strategy  is
improving  the  operating  performance  of  its  properties  over  time  through
intensive property  management.  The Company seeks to increase operating margins
through a combination of increasing revenues (through increased occupancy and/or
rental rates),  maintaining high tenant retention rates (i.e., the percentage of
tenants  who renew their  leases upon  expiration),  and  aggressively  managing
operating expenses.

         The  Company   believes  that,  as  a  fully   integrated  real  estate
organization  with both  owned and  third-party  managed  properties,  it enjoys
significant  operating  efficiencies  relative to many of its  competitors  that
operate smaller,  fragmented  portfolios.  These operating  efficiencies are the
result of economies of scale in operating  expenses,  more effective leasing and
marketing  efforts,  and  enhanced  tenant  retention  levels.  The Company also
benefits from  effectively  spreading  certain  fixed  property  management  and
leasing  costs  over  its  entire  owned  and  third-party   managed  portfolio.
Management  believes  that the scope of the Company's  portfolio,  combined with
managements'  professional and community ties to the Mid-Atlantic region and the
Chicago,  Illinois and  Milwaukee,  Wisconsin  metropolitan  areas,  enables the
Company to develop  long-term  relationships  with national and regional tenants
which occupy  multiple  properties in its portfolio,  which  improves  occupancy
rates and tenant retention levels.

         Strategic  Renovation  and  Expansion.  The  Company  seeks to increase
operating  results through the strategic  renovation and expansion of certain of
the Retail Properties.  The Retail Properties are typically adaptable for varied
tenant  layouts  and can be  reconfigured  to  accommodate  new  tenants  or the
changing space needs of existing tenants. In determining whether to proceed with
a renovation or expansion, the Company considers both the cost of such expansion
or  renovation  and the  increase  in rent  attributable  to such  expansion  or
renovation.  The Company  believes  that many of the Retail  Properties  provide
opportunities for renovation and expansion.

         The  following  table  sets  forth  information  with  respect  to  the
Company's recent and ongoing renovations and expansions:
<TABLE>
<CAPTION>
                                                                                       Additional
     Name                      Description                             Cost           Square Feet
     ----                      -----------                             ----           -----------
<S>                            <C>                                   <C>              <C>
     1999 Completed Projects:
     -----------------------
     City Avenue
          Shopping Center      Common area renovation                $  230                 --
     Newtown Square
       Shopping Center         Acme expansion
                                  and common area renovation          1,238             20,944
     Mallard Creek             Common area renovation                   290                 --
     Stonebrook Plaza          Common area renovation                   180                 --
                                                                     ------             ------

                                                                     $1,938             20,944
                                                                     ======             ======
</TABLE>




                                        2

<PAGE>
<TABLE>
<CAPTION>

                                                                     Estimated
                                                                     Completion           Estimated     Additional
     Name                        Description                         Date                 Cost          Square Feet
     ----                        -----------                         -----------          ---------     -----------
<S>                              <C>                                 <C>                  <C>           <C>
     2000 Projects:
     -------------
     Parkville  Shopping Center  Facade, common area renovation
                                   and expansion of A&P Superfresh   Fourth Quarter 2000     $ 2,400         22,500
     Saratoga Shopping Center    Facade & common area renovation     Third Quarter 2000          800              -
     Willston Centre I & II      Facade & common area renovation     Second Quarter 2000       1,500              -
     The Village                 Facade renovation                   Second Quarter 2000         175              -

                                                                                              ------         ------
                                                                                              $4,875         22,500
                                                                                              ======         ======
</TABLE>


       As a  fully-integrated  real estate  organization,  the Company maintains
expertise in the development of new retail properties, having developed three of
the  FWM  Properties  containing  approximately  525,000  square  feet  of  GLA.
Management believes the Company's principal anchor tenants and other real estate
professionals  present  the Company  with  development  opportunities  which the
Company may pursue.

         Opportunistic   Acquisitions.   Another  principal   component  of  the
Company's  strategy  is the  acquisition  of  additional  neighborhood  shopping
centers within the Mid-Atlantic region and the Chicago,  Illinois and Milwaukee,
Wisconsin  metropolitan areas. The Company will seek to acquire properties which
are  strategically  located  along major traffic  arteries in  well-established,
densely  populated  communities.  The Company  typically  selects  properties in
locations  where  it  believes  the  supply  of  developable   land  and  zoning
restrictions  impede the  development  of competing  shopping  centers and where
tenants'  location  alternatives  are limited.  The Company  would also consider
acquisitions in other  metropolitan  markets which  management  determines to be
both attractive and conveniently accessible.

         Through  its  third-party  management,   leasing  and  related  service
business and network of regional management and leasing offices,  the Company is
familiar  with local  conditions  in its given  markets.  Because the  Company's
third-party  clients  frequently  seek assistance  with the  revitalization  and
disposition of the properties,  the Company  believes it is in a unique position
to  ultimately  acquire  such  properties.  For example,  FWM provided  property
management and leasing  services for nine properties  acquired from  third-party
clients.  The Company believes  opportunities  for neighborhood  shopping center
acquisitions   are   particularly   attractive  at  this  time  because  of  the
fragmentation   in  ownership  of  such   properties  and  the  decline  in  the
construction of new retail properties.

         When evaluating potential acquisitions,  the Company will consider such
factors  as:  (i)  economic,  demographic,  and  regulatory  conditions  in  the
property's local and regional market; (ii) the location,  construction  quality,
and design of the  property;  (iii) the current and  projected  cash flow of the
property and the potential to increase cash flow; (iv) the potential for capital
appreciation  of the  property;  (v) the terms of tenant  leases,  including the
relationship  between  the  property's  current  rents and market  rents and the
ability to increase rents upon lease rollover;  (vi) the occupancy and demand by
tenants for properties of a similar type in the market area; (vii) the potential
to complete a strategic renovation,  expansion,  or retenanting of the property;
(viii) the property's  current  expense  structure and the potential to increase
operating  margins;  and, (ix) competition from comparable  retail properties in
the market  area.  The Company  successfully  completed  the  acquisition  of 51
properties since its organization in April 1994.

Financing Strategies

         The  Company   intends  to  finance  its  acquisition  and  development
activities with the most appropriate  sources of capital  available at the time,
which may include  undistributed  funds from  operations,  the net proceeds from
issuance of equity securities  (including Operating Partnership Units), bank and
other  institutional  borrowings,  sale of properties,  and the issuance of debt
securities.

         Future  borrowings may be either on a secured or unsecured  basis.  The
Company's ratio of debt to total market  capitalization  as of December 31, 1999
was approximately  48.1%. The Company is subject to a number of risks associated
with  borrowing,  including the  uncertainty  associated with the ability of the
Company to  refinance  mortgage  indebtedness  of  approximately  $74.6  million
maturing in 2000 and 2001,  that the  indebtedness  might be  refinanced on less
favorable  terms,  that  there  is a  lack  of  limitations  on  the  amount  of
indebtedness that the Company may incur, that interest rates

                                        3

<PAGE>



might  increase  on  variable  rate or  refinanced  indebtedness  and  that  the
Company's  level of leverage  may limit its ability to grow  through  additional
debt financing.

Marketing and Promotion

         The Company  engages in various  marketing and  promotional  activities
designed to increase consumer traffic,  retail sales and percentage rents at its
Properties.

Environmental Regulations

         The  Company,  as an  owner  of real  estate,  is  subject  to  various
environmental laws of Federal and local  governments.  Compliance by the Company
with  existing  laws has not had a  material  adverse  effect  on its  financial
condition  and  management  does not  believe it will have such an effect in the
future. However, the Company cannot predict the impact of new or changed laws or
regulations on its current Properties. All of the Properties have been subjected
to Phase I environmental  audits. A summary of environmental issues is set forth
below:

         Contamination  caused by dry  cleaning  solvents  has been  detected in
groundwater  below  the  Penn  Station  Shopping  Center.   The  source  of  the
contamination  has not been determined.  Potential sources include a dry cleaner
tenant at the Penn  Station  Shopping  Center  and a dry  cleaner  located in an
adjacent   property.   Sampling   conducted  at  the  site  indicates  that  the
contamination is limited and is unlikely to have any affect on human health. The
Company  has made a request  for  closure to the State of  Maryland.  Management
believes  that there is minimal  exposure at this time,  and  therefore  has not
recorded an environmental clean-up liability.

         Petroleum has been detected in the soil of a parcel adjacent to the Fox
Mill Shopping Center on property occupied by Exxon Corporation ("Exxon") for use
as a gas station (the "Exxon  Station").  Exxon has taken steps to remediate the
petroleum in and around the Exxon  Station,  which is located down gradient from
the Fox Mill Shopping Center.  Exxon has agreed to take full  responsibility for
the  remediation of such petroleum.  Currently,  the Company is not aware of any
contamination  of the  Company's  property  and none is  expected  to occur.  In
addition,  a dry cleaning solvent has been detected in the groundwater below the
Fox Mill Shopping Center. A groundwater pump and treatment  system,  approved by
the Virginia Water Control Board,  was installed in July 1992, and was operating
until recently when the Control Board ordered quarterly sampling to determine if
further  remediation  is necessary.  The previous owner of the Fox Mill Shopping
Center  has since  made a request  for  closure to the  Virginia  Department  of
Environmental  Quality.  The previous owner has also agreed to pay for the costs
of running the pumps and  monitoring the  contamination  and has agreed to fully
remediate the groundwater contamination to the extent required by the applicable
regulatory authority. Management believes that there is minimal exposure at this
time and, therefore, has not recorded an environmental clean-up liability.

         A dry cleaning  solvent has been  detected in the soil and  groundwater
below  the  Four  Mile  Fork  Shopping  Center.  Testing  conducted  at the site
indicates that the  contamination  is limited and is unlikely to have any affect
on human health. In addition,  the previous owner of the Four Mile Fork Shopping
Center has  provided  an  indemnification  for all costs and  expenses to obtain
closure from the  responsible  regulatory  authority,  and the  Commonwealth  of
Virginia  Department  of  Environmental  Quality  has  issued a  Certificate  of
Satisfactory  Completion  of  Remediation.  Management  believes  that  there is
minimal exposure at this time and, therefore,  has not recorded an environmental
clean-up liability.

         A dry  cleaning  solvent has been  detected in the soil below the Bowie
Plaza Shopping Center. Testing done at the site indicates that the contamination
is limited and is unlikely to have any affect on human health. In addition,  the
previous owner of the property has provided an indemnification for all costs and
expenses to obtain  closure from the  responsible  regulatory  authority.  Also,
petroleum  has been  detected in the soil and  groundwater  beneath the property
arising from a release from an adjoining  Shell service station not owned by the
Company.  Shell is liable for the clean up and is currently  performing clean up
activities.  Also,  the  contamination  is  unlikely  to have an affect on human
health.  In  light of the  above,  management  believes  that  there is  minimal
exposure at this time and, therefore, has not recorded an environmental clean-up
liability for either of these items.

         Petroleum  has been  detected in the soil and  groundwater  beneath the
Newtown Square  Shopping  Center arising from a release from an adjoining  Mobil
service  station not owned by the Company.  Mobil is liable for the clean up and
is currently performing clean up activities. Also, the contamination is unlikely
to have an affect on human health.  In light of the above,  management  believes
that there is minimal exposure at this time and, therefore,  has not recorded an
environmental clean-up liability for either of these items.


                                        4

<PAGE>



         Dry cleaning  solvent and hydraulic fluid has been detected in the soil
below  the  Riverside  Square.  Testing  done at the  site  indicates  that  the
contamination is limited and is unlikely to have any affect on human health, and
the  environmental  consultant  recommended  that no  further  investigation  or
remediation  was  warranted  at that  time.  In light of the  above,  management
believes  that there is minimal  exposure at this time and,  therefore,  has not
recorded an environmental clean-up liability.

         Petroleum  has been  detected  in the soil and  groundwater  beneath an
Exxon  service  station not owned by the Company which is adjacent to the Spring
Valley  Shopping  Center.  Exxon is  liable  for the  clean up and is  currently
performing clean up activities.  Also, the  contamination is unlikely to have an
affect on human health. In light of the above, management believes that there is
minimal exposure at this time and, therefore,  has not recorded an environmental
clean-up liability.

         Petroleum has been  detected in the soil below the  Parkville  Shopping
Center.  Testing  conducted  at the site  indicates  that the  contamination  is
limited and is unlikely to have any affect on human  health.  In  addition,  the
previous owner of the Parkville Shopping Center provided an indemnification  for
all costs  and  expenses  to  obtain  closure  from the  responsible  regulatory
authority,  and the  Maryland  Department  of the  Environment  has issued a "no
further action" letter.  Management  believes that there is minimal  exposure at
this time and, therefore, has not recorded an environmental clean- up liability.

         Petroleum and a dry cleaning solvent have been detected in the soil and
groundwater  below The Village  Shopping Center.  Testing  conducted at the site
indicates that the  contamination  is limited and is unlikely to have any affect
on human health. In addition,  the previous owner of The Village Shopping Center
provided an  indemnification  for all costs and expenses to obtain  closure from
the  responsible   regulatory  authority,   and  the  Commonwealth  of  Virginia
Department of  Environmental  Quality has issued a "no further  action"  letter.
Management  believes that there is minimal exposure at this time and, therefore,
has not recorded an environmental clean-up liability.

         Dry  cleaning  solvent has been  detected  in the soil and  groundwater
below  the  Kamp  Washington  Shopping  Center.  Testing  conducted  at the site
indicates  that the  contamination  is  largely  confined  to the site and poses
minimal risk to public  health or the  environment.  In  addition,  the previous
owner of the Kamp Washington  Shopping Center has agreed to be responsible for a
portion  of the  costs  and  expenses  to obtain  closure  from the  responsible
regulatory authority. Management believes that there is minimal exposure at this
time and,  therefore,  has not recorded an environmental  clean- up liability at
this time.

         Dry  cleaning  solvent has been  detected  in the soil and  groundwater
below  the  Westmont  Plaza  Shopping  Center.  Testing  conducted  at the  site
indicates that the  contamination  is limited and is unlikely to have any affect
on human health. In addition,  the previous owner of the Westmont Plaza Shopping
Center provided an indemnification  for all costs and expenses to obtain closure
from the responsible  regulatory  authority.  Management  believes that there is
minimal exposure at this time and, therefore,  has not recorded an environmental
clean-up liability.

         Petroleum and a dry cleaning solvent have been detected in the soil and
groundwater  below the Woodmoor  Shopping Center.  Testing conducted at the site
indicates that the  contamination  is limited and is unlikely to have any affect
on human health. In addition, the previous owner of the Woodmoor Shopping Center
provided an  indemnification  for all costs and expenses to obtain  closure from
the responsible regulatory authority.  Steuart Petroleum is liable for any clean
up of the petroleum and is pursuing closure.  Management  believes that there is
minimal exposure at this time and, therefore,  has not recorded an environmental
clean-up liability.

Insurance

         The Company's tenants are generally  responsible for providing adequate
insurance on the Retail  Properties they lease.  The Company believes the Retail
Properties are covered by adequate fire, flood and property  insurance  provided
by reputable companies.  However,  some of the Retail Properties are not covered
by disaster  insurance with respect to certain hazards (such as earthquakes) for
which coverage is not available or available only at rates which, in the opinion
of the Company, are prohibitive.

         Certain   statements   in  this   Form   10-K  may  be   deemed  to  be
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended.  Such  forward-looking  statements  involve known and unknown risks,
uncertainties  and other  factors  which may cause  the  actual  results  of the
Company to be materially  different from historical  results or from any results
expressed   or  implied  by  such   forward-looking   statements.   Such  risks,
uncertainties and other factors include, but are not limited to,

                                        5

<PAGE>



the following risks:  risks associated with borrowing;  limitations on the level
of  distributions  payable on the Common Stock;  the level of  distributions  on
Common Stock that represent a return of capital for Federal income tax purposes;
general real estate  investment and financing  risks;  risks associated with the
Company's third-party business;  possible conflicts of interest;  limitations on
the  stockholders'  ability to change  control of the Company and failure of the
Company to qualify as a REIT.

                                        6

<PAGE>
Item 2 Properties

 The Following table sets forth certain information relating to the Properties
                            as of December 31, 1999

                        FIRST WASHINGTON REALTY TRUST INC
                             PROPERTY SUMMARY TABLE
<TABLE>
<CAPTION>
                                                                                          LAND       LEASABLE
                                                                  YEAR         YEAR       AREA         AREA      PERCENT
    PROPERTY                              LOCATION                BUILT      ACQUIRED    (ACRES)      (SQFT)     LEASED
    --------                              --------                -----      --------    -------     --------    -------
<S>                                      <C>                      <C>         <C>         <C>       <C>         <C>
WASHINGTON DC METRO
Bowie Plaza                              Bowie, MD                 1966         1998       10.8      104,836      97.1%
Bryans Road Shopping Center              Bryans Road, MD           1972         1990       11.8      118,676      98.3%
Capital Corner Shopping Center           Landover , MD             1987         1987        4.1       42,625      76.0%
Clinton Square Shopping Center           Clinton, MD               1979         1984        2.0       18,961      62.4%
Cloppers Mills Vilage Shopping Center    Germantown, MD            1995         1996       14.2      137,035      99.0%
Firstfield Shopping Center               Gaithersburg, MD          1978         1995        2.4       22,327     100.0%
Mitchellville Plaza                      Mitchellville, MD         1991         1997       14.5      155,674      96.2%
Penn Station Shopping Center (1)         District Heights, MD      1989         1987       22.5      334,970      79.1%
Prince George's County Commercial Park   Beltsville, MD            1988         1985        9.7      146,422      90.3%
Rosecroft Shopping Center                Temple Hills, MD          1963         1985        8.3      119,010      93.5%
Takoma Park Shopping Center              Takoma Park, MD           1960         1996        9.8      108,168     100.0%
Watkins Park Plaza                       Mitchellville, MD         1985         1998       12.8      112,143      97.9%
Woodmoor Shopping Center                 Silver Spring, MD         1954         1999        3.1       67,394      98.4%
Ashburn Farm Village Center              Ashburn, VA               1996         1997       10.2       88,917     100.0%
Brafferton Center                        Garrisonville, VA         1974         1994        9.4       94,731      98.3%
Centre Ridge Marketplace                 Centreville, VA           1996         1996       10.9      104,154      98.8%
Chesapeake Bagel Building                Alexandria, VA           1800's        1983        0.1       11,288     100.0%
Davis Ford Crossing                      Manassas,VA               1988         1994       20.8      149,917      86.7%
Four Mile Fork Shopping Center           Fredericksburg, VA        1975         1997       10.3      101,360      90.5%
Fox Mill Shopping Center                 Reston, VA                1977         1994       14.0      103,269      94.3%
Kamp Washington Shopping Center          Fairfax, VA               1960         1999        5.9       71,825     100.0%
Kings Park Shopping Center               Burke, VA                 1966         1996        8.6       78,013     100.0%
Potomac Plaza                            Woodbridge,VA             1963         1986        5.4       85,400      97.4%
Saratoga Shopping Center                 Springfield, VA           1977         1999       11.3      101,587      94.1%
Town Center at Sterling                  Sterling, VA            1973-1978      1998       14.3      185,071     100.0%
Willston Centre I                        Falls Church, VA          1952         1998        5.9       86,468     100.0%
Willston Centre II                       Falls Church, VA          1986         1998       10.6      127,434     100.0%
The Georgetown Shops  (3)                Washington, DC         Late 1800's   1981-1989     0.2        9,052     100.0%
Connecticut Avenue Shops                 Washington, DC            1954         1986        0.1        3,000     100.0%
Spring Valley Shopping Center            Washington, DC            1930         1997        0.9       16,834     100.0%
</TABLE>

<TABLE>
<CAPTION>


                                         SIGNIFICANT TENANTS
     PROPERTY                          (LEASE EXPIRATION DATES)                               ENCUMBRANCES
     --------                          ------------------------                               ------------
                                                                                               (in 000's)
<S>                                   <C>                                                      <C>
WASHINGTON DC METRO
Bowie Plaza                            Giant (2002), CVS (2003)                                   $ 4,703
Bryans Road Shopping Center            Safeway (2014), CVS (2006)
Capital Corner Shopping Center
Clinton Square Shopping Center
Cloppers Mills Village Shopping Center Shoppers Food Warehouse (2015), CVS (2006),                 13,627
Firstfield Shopping Center                                                                          2,416
Mitchellville Plaza                    Food Lion (2016)                                            14,249
Penn Station Shopping Center (1)       Safeway (n/a)
Prince George's County Commercial Park
Rosecroft Shopping Center              Food Lion (2015)
Takoma Park Shopping Center            Shoppers Food Warehouse (2011)                              44,000(2)
Watkins Park Plaza                     Safeway (2007), CVS (2006)                                        (2)
Woodmoor Shopping Center               CVS (2005)
Ashburn Farm Village Center            A & P Superfresh (2016)                                      6,537
Brafferton Center                      Giant Food (2009)
Centre Ridge Marketplace               A & P Superfresh (2016); Sears Paint & Hardware (2007)            (2)
Chesapeake Bagel Building                                                                             735
Davis Ford Crossing                    Weis Markets (2010), CVS (2005)                             10,617
Four Mile Fork Shopping Center         CVS (2001)                                                        (2)
Fox Mill Shopping Center               Giant Food(2018)                                            11,724
Kamp Washington Shopping Center        Borders Books (2010)                                         2,979
Kings Park Shopping Center             Giant (2013), CVS (2003)                                     4,458
Potomac Plaza                                                                                       2,579
Saratoga Shopping Center               Giant Food (2002)                                            6,776
Town Center at Sterling                Giant Food (2003)                                            8,847
Willston Centre I                      CVS (2003)
Willston Centre II                     Safeway (2015)                                              10,132
The Georgetown Shops  (3)
Connecticut Avenue Shops
Spring Valley Shopping Center          CVS (2009)
</TABLE>

                                       7
<PAGE>

Item 2 Properties

                       FIRST WASHINGTON REALTY TRUST INC
                             PROPERTY SUMMARY TABLE
                                  (Continued)

<TABLE>
<CAPTION>
                                                                                     LAND       LEASABLE
                                                                YEAR        YEAR       AREA         AREA      PERCENT
    PROPERTY                          LOCATION                  BUILT     ACQUIRED    (ACRES)      (SQFT)     LEASED
    --------                          --------                  -----     --------    -------     --------    -------
<S>                                  <C>                      <C>        <C>         <C>       <C>         <C>
BALTIMORE METRO
Elkridge Corners Shopping Center   Elkridge, MD                 1990         1998        8.4       73,529       100.0%
Festival At Woodholme              Baltimore, MD                1986         1995        7.1       81,027       100.0%
Northway Shopping Center           Millersville, MD             1987         1996        9.6       98,016        93.2%
Parkville Shopping Center          Baltimore, MD                1961         1998       12.7      140,925        97.0%
Southside Marketplace              Baltimore, MD                1990         1996        9.1      125,146        96.6%
Valley Centre                      Owings Mills, MD             1987         1994       33.0      251,928        93.1%
CHICAGO METRO
McHenry Commons                    McHenry, IL                  1988         1997       11.5      100,526        98.6%
Mallard Creek                      Round Lake Beach, IL         1987         1997       14.9      143,759       100.0%
Riverside Square/River's Edge      Chicago, IL                  1986         1997       17.7      169,435        94.1%
Stonebrook Plaza                   Merrionette Park, IL         1984         1997        8.1       95,825        96.1%
The Oaks Shopping Center           Des Plaines, IL              1983         1997       16.7      135,030        95.5%
RICHMOND, VA. METRO
Glen Lea Shopping Center           Richmond, VA                 1969         1995        9.2       77,603       100.0%
Hanover Village Shopping Center    Mechanicsville, VA           1971         1995        9.5       96,146        98.3%
Laburnum Park Shopping Center(5)   Richmond, VA                 1988         1995        9.3      113,992        97.7%
Laburnum Square Shopping Center    Richmond, VA                 1975         1995       11.4      109,405        87.3%
The Village Shopping Center        Richmond, VA                 1948         1998       11.7      110,885        99.6%
PHILADELPHIA METRO
City Avenue Shopping Center        Philadelphia, PA          1950's-60's     1997       12.2      161,454        96.3%
Mayfair Shopping Center            Philadelphia, PA             1988         1994        5.7      115,027        99.0%
Newtown Square Shopping Center     Newtown Square, PA        1960's-70's     1996       14.4      142,210        97.6%
Westmont Plaza Shopping Center     Hadden Township, NJ        1953/1983      1999        9.5       52,640       100.0%
WILMINGTON, DE. METRO
First State Plaza                  New Castle,  DE              1988         1994       21.0      164,569        99.0%
Newark Shopping Center             Newark, Delaware          1950's- 87      1999       16.8      182,860        91.5%
Shoppes of Graylyn                 Wilmington, DE               1971         1997        5.0       66,676       100.0%
</TABLE>

<TABLE>
<CAPTION>


                                         SIGNIFICANT TENANTS
     PROPERTY                          (LEASE EXPIRATION DATES)                                  ENCUMBRANCES
     --------                          ------------------------                                  ------------
                                                                                                  (in 000's)
<S>                                   <C>                                                         <C>
BALTIMORE METRO
Elkridge Corners Shopping Center       A & P Superfresh (2015), Rite Aid (2005)                      6,322
Festival At Woodholme                  Sutton Place Gourmet (2006)                                  11,238
Northway Shopping Center               Metro Foods (2007)                                            6,043
Parkville Shopping Center              A & P Superfresh (2015),Rite Aid (2001)                       3,409
Southside Marketplace                  Metro Foods (2016), Rite Aid (2001)                           7,848
Valley Centre                          Weis Markets(2007),TJ Maxx(2007),Sony Theaters (2005)        21,562
CHICAGO METRO
McHenry Commons                        Dominick's Finer Foods (2008)                                 6,640
Mallard Creek                          Dominick's Finer Foods (2008)                                10,802
Riverside Square/River's Edge          Dominick's Finer Foods (2017)
Stonebrook Plaza                       Dominick's Finer Foods (2005)                                 5,770
The Oaks Shopping Center               Dominick's Finer Foods (2017)                                 9,242
RICHMOND, VA. METRO
Glen Lea Shopping Center               Winn Dixie (2005), Eckerd Drug (2005)                        12,627(4)
Hanover Village Shopping Center        Rack 'N Sack (2008), Rite Aid (2003)
Laburnum Park Shopping Center (5)      Ukrop's Supermarket (n/a), Rite Aid (2007)                         (4)
Laburnum Square Shopping Center        Hannaford Brothers Supermarket (2013)                              (4)
The Village Shopping Center            Ukrop's Super Market (2019), CVS (2003)                            (4)
PHILADELPHIA METRO
City Avenue Shopping Center            Acme Supermarkets(2004), Eckerd Drug(2004),T J Maxx(2001)     9,581
Mayfair Shopping Center                Shop 'N Bag Supermarket(2013), Eckerd  Drug (2006)            6,650
Newtown Square Shopping Center         Acme Supermarkets(2014), Eckerd Drug (2004)                        (2)
Westmont Plaza Shopping Center         Acme (2000), CVS (2005)
WILMINGTON, DE. METRO
First State Plaza                      Shop Rite Supermarket(2009), Cinemark USA(2011),             13,594
Newark Shopping Center                                                                               9,337
Shoppes of Graylyn                     Rite Aid (2016)                                                    (2)
</TABLE>

                                       8
<PAGE>

Item 2 Properties

                       FIRST WASHINGTON REALTY TRUST INC
                             PROPERTY SUMMARY TABLE
                                  (Continued)

<TABLE>
<CAPTION>
                                                                                     LAND       LEASABLE
                                                              YEAR        YEAR       AREA         AREA      PERCENT
    PROPERTY                        LOCATION                  BUILT     ACQUIRED    (ACRES)      (SQFT)     LEASED
    --------                        --------                  -----     --------    -------     --------    -------
<S>                                <C>                      <C>        <C>         <C>       <C>         <C>
MILWAUKEE METRO
Cudahy Center                        Cudahy, WI               1972        1999         7.2      103,254       84.6%
Racine Centre                        Mount Pleasant, WI       1988        1999        13.4      135,827       96.4%
Whitnall Square                      St. Francis, WI          1989        1999        15.9      133,301       94.7%
CENTRAL PENNSYLVANIA
Allen Street Shopping Center         Allentown, PA            1958        1996         4.1       46,503       97.4%
Colonial Square Shopping Center      York, PA                 1955        1990         2.9       28,640      100.0%
Kenhorst Plaza Shopping Center       Kenhorst, PA             1990        1995        19.2      161,424       98.9%
Stefko Boulevard Shopping Center     Bethlehem, PA         1958-60-75     1996        10.3      135,864       95.6%
RALIEGH, NC.
Shoppes Of Kildaire                  Cary, NC                 1986        1986        14.0      148,204      100.0%
CHARLESTON, SC.
James Island Shopping Center         Charleston, SC           1967        1990         6.5       88,557      100.0%
                                                                                     -----    ---------      -----
TOTAL/AVERAGE                                                                        642.9    6,696,748       95.4%
                                                                                     =====    =========       ====
</TABLE>


<TABLE>
<CAPTION>


                                             SIGNIFICANT TENANTS
     PROPERTY                               (LEASE EXPIRATION DATES)                                      ENCUMBRANCES
     --------                               ------------------------                                      ------------
                                                                                                            (in 000's)
<S>                                        <C>                                                             <C>
MILWAUKEE METRO
Cudahy Center                               Pick 'N Save (2001), Walgreens (2028)                                  (6)
Racine Centre                               Super Saver (2003), Office Depot (2006)                                (6)
Whitnall Square                             Pick 'N Save (2009), Walgreens (2030)                                  (6)
CENTRAL PENNSYLVANIA
Allen Street Shopping Center                Laneco (2003), Eckerd Drug (2004)                                 5,714(7)
Colonial Square Shopping Center             Minnichs Pharmacy (2003)
Kenhorst Plaza Shopping Center              Redners(2009), Rite Aid(2000); Sears Paint & Hardware(2007)            (2)
Stefko Boulevard Shopping Center            Laneco (2003)                                                          (7)
RALIEGH, NC.
Shoppes Of Kildaire                         Winn Dixie (2006),                                                7,358
CHARLESTON, SC.
James Island Shopping Center                Piggly Wiggly (2010), Kerr Drug (2002)
                                                                                                            --------
TOTAL/AVERAGE                                                                                               $298,116
                                                                                                            ========
</TABLE>
-------------
(1)  Includes  Safeway  (50,000 sq. ft.) and Bowling  Alley (40,000 sq. ft.) pad
     sites owned by others.
(2)  These properties  serve as collateral for the Line of Credit  facility.  As
     December 31, 1999, $44,000 is outstanding on the Line of Credit.
(3)  Represents  two (2) historic  retail shops located in the central  shopping
     district of Georgetown, Washington D.C.
(4)  These properties are encumbered by first deeds of trust as collateral for a
     $12,627 mortgage loan.
(5)  Includes Ukrop's Supermarket (49,000 sq. ft.) pad site owned by Ukrop's.
(6)  These  properties were  subsequently  encumbered by first deeds of trust in
     January 2000.
(7)  These  properties  are encumbered by first deeds of trust as collateral for
     $5,714 mortgage loan.

                                        9

<PAGE>


Competition

         There are numerous  commercial  developers,  real estate  companies and
other  owners of real estate  that  operate in the  Mid-Atlantic  region and the
Chicago, Illinois and Milwaukee, Wisconsin metropolitan areas which compete with
the Company in seeking acquisition opportunities and tenants for its properties.
In  addition,  retailers at the shopping  centers face  competition  from malls,
factory outlet centers,  discount shopping clubs, direct mail, telemarketing and
the Internet.

         Retail  Properties.  The Retail  Properties  are  located in  Maryland,
Virginia,  North Carolina,  Pennsylvania,  Delaware,  South Carolina,  Illinois,
Wisconsin and the District of Columbia.  The 62 Retail  Properties are primarily
neighborhood  shopping centers  containing a total of approximately  6.7 million
square  feet  of  GLA  occupied  by  approximately  1,400  tenants.  The  Retail
Properties  range  in  size  from  approximately  3,000  square  feet  of GLA to
approximately  335,000  square feet of GLA,  and average  approximately  108,000
square  feet of GLA. A  substantial  portion of the income  from the  Properties
consists of rent received  under long term leases.  Most of these leases provide
for the payment of fixed  minimum rent monthly in advance and for the payment by
tenants of a pro-rata share of the real estate taxes,  insurance,  utilities and
common area maintenance of the shopping centers.  Certain of these tenant leases
provide  for  exclusion  from  some  or all of  these  expenses.  The  Company's
portfolio is  comprised of a  diversified  tenant  base,  with no single  tenant
representing more than 7.1% of the Company's annualized minimum rent. All of the
Retail  Properties  are managed by the Company.  As of December  31,  1999,  the
Retail Properties were 95.4% leased.

         Lease  Expirations.  The  majority  of leases on the Retail  Properties
provide for lease terms of between three and 20 years. The following table shows
lease  expirations  (excluding  renewal  options)  for the  calendar  years 2000
through 2009 and thereafter:

<TABLE>
<CAPTION>
            Number of       Approximate     Percent of Total      Annualized    Percent of Total   Average Annual
             Leases             GLA          GLA Represented    Minimum Rent of    Annualized       Minimum Rent
Year        Expiring      in Square Feet   by Expiring Leases    Expiring Leases  Minimum Rent     per Square Foot
----        --------      --------------   ------------------ ------------------  ------------     ---------------
                            (in 000's)                            (in 000's)
<S>            <C>              <C>              <C>              <C>                 <C>              <C>
2000           364              770              12.4%            $  8,922            12.3%            $11.59
2001           239              716              11.5%               9,061            12.5%             12.66
2002           201              607               9.8%               7,622            10.5%             12.55
2003           202              868              14.0%              10,074            13.9%             11.60
2004           160              537               8.6%               7,139             9.9%             13.30
2005            72              370               6.0%               4,303             6.0%             11.61
2006            49              278               4.5%               3,796             5.3%             13.64
2007            31              339               5.4%               3,588             5.0%             10.59
2008            19              251               4.0%               2,446             3.4%              9.74
2009            26              285               4.6%               3,118             4.3%             10.95
 Thereafter     52            1,194              19.2%              12,240            16.9%             10.25
                --            -----              -----              ------            -----             -----

Total        1,415            6,215             100.0%             $72,309           100.0%            $11.64
             =====            =====             ======             =======           ======            ======

</TABLE>


                                       10

<PAGE>





         Tenant  Diversification.  The  following  table sets forth  information
regarding the Company's leases with its 20 largest tenants based upon annualized
minimum rents as of December 31, 1999:
<TABLE>
<CAPTION>
                                                                                          Percentage of Aggregate
                                                            Number         Annualized           Annualized
Tenant                               GLA (Sq. Ft.)      of Properties     Minimum Rent         Minimum Rents
------                             -----------------     -------------    ------------         -------------
                                                                           (in 000's)
<S>                                     <C>                  <C>              <C>                  <C>
Safeway/Dominick's                     577,089               10               $5,181               7.07%
Supervalu (1)                          356,640                7                2,491               3.40%
A&P Superfresh                         170,489                4                1,568               2.14%
CVS/Pharmacy                           131,952               12                1,417               1.93%
Blockbuster Video                       82,222               14                1,347               1.84%
Giant Food                             221,642                6                1,315               1.79%
Ukrops                                  88,003                2                1,137               1.55%
Shop Rite Supermarket                   57,333                1                  974               1.33%
Fashion Bug                             89,793               11                  820               1.12%
Weis Markets                            94,960                2                  786               1.07%
Rite Aid                                81,418                7                  768               1.05%
Borders Books Music                     30,000                1                  690               0.94%
Food Lion                               78,100                2                  678               0.92%
Sears Paint Hardware                    65,816                3                  670               0.91%
First Union                             17,396                8                  653               0.89%
McDonalds                               22,548                9                  634               0.86%
Acme Markets                           120,466                3                  613               0.84%
Eckerd Drug                             45,752                5                  593               0.81%
Pick 'N Save                           131,955                2                  577               0.78%
Radio Shack                             33,296               15                  503               0.69%
                                    ----------                             ---------           --------

      Total                          2,496,870                            $   23,415              31.93%
                                    ==========                         =============             =======
</TABLE>

(1) Includes Shoppers Food Warehouse, Metro Foods, Laneco and Rack 'N Sack.


Mortgages, Notes and Loans Payable

         Information relating to future maturities of mortgages, notes and loans
payable  at  December  31,  1999 is set  forth in  Management's  Discussion  and
Analysis of Financial  Condition  and Results of Operation and footnote 5 to the
Consolidated   Financial   Statements  included  with  this  Form  10-K  and  is
incorporated by reference herein.


ITEM 3.  LEGAL PROCEEDINGS

         The Company is not presently  involved in any material  litigation nor,
to its knowledge,  is any material litigation  threatened against the Company or
its properties,  other than routine litigation arising in the ordinary course of
business  or  which  is  expected  to be  covered  by  the  Company's  liability
insurance.  In the opinion of management of the Company,  such litigation is not
expected to have a material adverse effect on the business,  financial condition
or results of operations of the Company.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matter was  submitted  to a vote of  security  holders  through  the
solicitation  of proxies or otherwise  during the fourth  quarter of fiscal year
1999


                                       11

<PAGE>


                                     PART II

Item 5.  Market  for the  Registrant's  Common  Equity and  Related  Shareholder
Matters

(a)  Market Information

         The  Company's  Common Stock and  Preferred  Stock began trading on the
NASDAQ  National  Market  System on June 27,  1995.  On  August  13,  1996,  the
Company's  common  and  preferred  stock  began  trading  on the New York  Stock
Exchange  under the symbol FRW. The high and low market  values of the Company's
Common Stock for 1998 and 1999 are as follows:
<TABLE>
<CAPTION>
                                                                 Distributions
                                      High           Low           Per Share
                                      ----           ---           ---------
<S>                                 <C>           <C>              <C>
1998
         First Quarter              $ 28.00       $ 25.38          $ .4875
         Second Quarter               27.13         22.31            .4875
         Third Quarter                24.13         20.00            .4875
         Fourth Quarter               24.00         22.06            .4875

1999
         First Quarter              $ 23.94       $ 20.44          $ .4875
         Second Quarter               23.75         19.38            .4875
         Third Quarter                24.00         20.94            .4875
         Fourth Quarter               21.00         17.75            .4875
</TABLE>

(b)  Holders of Record

         As of March 17, 2000 the approximate number of holders of record of the
Common Stock was 190 and the approximate number of beneficial owners was 6,300.

(c)  Dividends

         The Company intends to make quarterly  distributions  to its common and
preferred stockholders. Quarterly distributions made during 1999 are as follows:

Record Date                      Payment Date                 Amount Per Share
-----------                      ------------                 ----------------

Common Stock
  February 1, 1999               February 15, 1999                $0.4875
  May 1, 1999                    May 15, 1999                     $0.4875
  August 1, 1999                 August 15, 1999                  $0.4875
  November 1, 1999               November 15, 1999                $0.4875

Preferred Stock
  February 1, 1999               February 15, 1999                $0.6094
  May 1, 1999                    May 15, 1999                     $0.6094
  August 1, 1999                 August 15, 1999                  $0.6094
  November 1, 1999               November 15, 1999                $0.6094

         The actual cash flow that the Company  will realize will be affected by
a number of factors, including the revenues received from rental properties, the
operating  expenses of the Company,  the interest expense on its borrowing,  the
ability  of  lessees to meet their  obligations  to the  Company,  unanticipated
capital  expenditures and dividends received from the Company's interest in FWM.
Future  distributions  paid  by the  Company  will be at the  discretion  of the
Directors of the Company and will depend on the actual cash flow of the Company,
its  financial  condition,   capital   requirements,   the  annual  distribution
requirements  under the REIT provisions of the Internal Revenue Code of 1986, as
amended (the "Code") and such other factors as the Directors of the Company deem
relevant.

         For the fiscal year ended December 31, 1999, none of the  distributions
made on the Common Stock represented a return of capital.

                                       12

<PAGE>



Recent Sales of unregistered equity securities

(a)   Securities sold

              The following table sets forth the date of sale,  title and amount
      of  unregistered  securities sold by the Company during the fourth quarter
      of fiscal year 1999:

    Date of Sale        Title               Amount            Consideration
    ------------        -----               ------            -------------
     11/08/99          Common Units      185,273 units   Retail property having
                                                        a value of $5.6 million.

(b)   Underwriters and other purchasers

              There were no underwriters retained in connection with the sale of
      the above  securities  which  were  issued  in  transactions  exempt  from
      registration under Section 4(2) of the Securities Act.

(c)   Exemption from registration claimed.

              Each of the transactions is exempt from  registration  pursuant to
      Section 4(2) of the Securities Act of 1933, as amended (the "Act").

(d)   Terms of Conversion

              The Common Units are exchangeable,  at the Company's  option,  for
      cash equal to the fair market value of a share of Common Stock at the time
      of exchange or one share of Common Stock.

Item 6.  Summary of Selected Financial Data

         The  following  table  sets  forth  selected  financial  and  portfolio
information  of the  Company,  and  should  be  read  in  conjunction  with  the
discussion  set forth in  "Management's  Discussion  and  Analysis of  Financial
Condition  and Results of  Operations,"  and all of the  consolidated  financial
statements and notes thereto included in this Form 10-K.




                                       13

<PAGE>
<TABLE>
<CAPTION>
                                                                 SELECTED CONSOLIDATED FINANCIAL INFORMATION (1)
                                                                             Year Ended December 31,
                                                         -------------------------------------------------------------
                                                                  (dollars in thousands, except per share data)
                                                               1999       1998        1997         1996      1995
                                                               ----       ----        ----         ----      ----
<S>                                                          <C>        <C>          <C>          <C>      <C>
OPERATING DATA:
Revenues:
  Minimum rents                                              67,092     56,702      43,857       31,398    22,793
  Tenant reimbursements                                      16,877     14,176       9,506        6,704     4,362
  Percentage rents                                            1,709      1,613       1,060          664       495
  Other income                                                1,850      1,573       1,211        1,672     1,447
                                                              -----      -----       -----      -------   -------
        Total revenues                                       87,528     74,064      55,634       40,438    29,097
                                                             ------     ------      ------       ------    ------

Expenses:
  Property operating and maintenance                         20,140     17,934      13,522        9,743     6,746
  General and administrative                                  4,161      3,789       3,363        3,137     2,831
  Interest                                                   21,481     19,966      18,416       14,986    11,230
  Depreciation and amortization                              16,985     14,627      11,172        8,019     5,808
                                                             ------     ------      ------       ------    ------
        Total expenses                                       62,767     56,316      46,473       35,885    26,615
                                                             ------     ------      ------       ------    ------

Income before gain (loss) on sale of properties,
  income (loss) from  Management Company,
  minority interest, extraordinary item
  and distributions to Preferred Stockholders                24,761     17,748       9,161        4,553     2,482
Gain (loss) on sale of properties                              (495)     2,371         549         -         -
Income (loss) from Management Company                        (1,103)        82         433          221       449
                                                             -------    ------      ------       ------    ------
Income before minority interest, extraordinary
  item and distributions to Preferred Stockholders           23,163     20,201      10,143        4,774     2,931
Income allocated to minority interest                        (5,717)    (4,602)     (1,743)        (694)     (602)
                                                             -------    -------     -------      ------    -------
Income before extraordinary item and distributions
 to Preferred Stockholders                                   17,446     15,599       8,400        4,080     2,329
Extraordinary item (net of minority interest)                 -           (277)       (790)        -         -
                                                            -------     -------    --------     -------     -----
Net income                                                   17,446     15,322       7,610        4,080     2,329
Distributions to Preferred Stockholders                      (6,120)    (5,641)     (5,641)      (5,641)   (5,117)
                                                             -------    -------     -------     --------  --------
Net income (loss) allocated to Common Stockholders          $11,326     $9,681      $1,969      $(1,561)  $(2,788)
                                                            =======     ======      ======      ========  ========
Earnings (loss)  per Common Share - Basic (2)                 $1.25      $1.21       $0.35       ($0.46)   ($1.19)
                                                              =====      =====       =====        =====     =====
Earnings(loss)  per Common Share - Diluted                    $1.23      $1.20       $0.34       ($0.46)   ($1.19)
                                                              =====      =====       =====        =====     =====
Weighted average Common Shares - Basic                        9,086      7,978       5,663        3,367     2,351
                                                            =======      =====       =====        =====    ======
Weighted average Common Shares - Diluted                      9,179      8,055       5,730        3,367     2,351
                                                              =====      =====       =====        =====     =====
Cash dividends per Common Share                               $1.95      $1.95       $1.95        $1.95     $1.95
                                                            =======      =====       =====        =====     =====

BALANCE SHEET DATA  (END OF PERIOD):
  Rental properties                                        $614,996   $556,146    $456,798     $314,235  $228,092
  Total assets                                             $583,293   $532,954    $439,141     $313,613  $227,405
  Mortgage notes payable                                   $298,116   $244,113    $212,030     $167,047  $116,182
  Debentures                                                -          $25,000     $25,000      $25,000   $25,000
  Total liabilities                                        $310,466   $280,655    $247,944     $198,375  $145,241
  Minority interest                                         $66,267    $66,218     $38,255      $16,661   $11,088
  Stockholders' equity                                     $206,560   $186,081    $152,942      $98,577   $71,076

PORTFOLIO PROPERTY DATA  (END OF PERIOD):
  Retail occupancy                                             95.4%      95.3%       96.2%        96.4%     96.0%
  Number of retail properties                                    62         55          47           36        27
  Number of multi-family properties                            -          -              2            2         2
  Retail Properties GLA
     (thousands of square feet)                               6,697      5,954       4,931        3,652     2,668
  Multi-family properties (number of units)                    -          -            401          401       401
OTHER DATA:
   Funds From Operations- Diluted  (3) (4)                  $41,653    $34,519     $23,949      $16,352   $12,601
  Cash flow provided by operating activities                $39,230    $27,148     $23,441      $11,616   $10,003
  Cash flow (used in) investing activities                 $(42,551)  $(28,230)   $(25,689)   $(56, 994)  $29,884
  Cash flow provided by (used in) financing activities       $4,490     $1,103     $(6,390)     $49,352   $26,574

</TABLE>

(1)  See Item 7 Management's  Discussion and Analysis of Financial Condition and
     Results of Operation and Financial Statements.

(2)  Earnings  (loss) per Common  Share is based on the weighted  average  total
     shares of Common Stock  outstanding.  Because the Company's income is based
     on its  percentage  interest in the  Operating  Partnership's  income,  the
     Earnings  (loss)  per  Common  Share  would be  unchanged  for the  periods
     presented  even if the Common Units were  exchanged for Common Stock of the
     Company.

(3)  The Company considers Funds From Operations to be an appropriate measure of
     the  performance  of an equity REIT.  Funds From  Operations  is defined by
     NAREIT as net  income  (computed  in  accordance  with  generally  accepted
     accounting principles),  excluding gains (or losses) from sales of property
     and  extraordinary  items as defined  under  GAAP,  plus  depreciation  and
     amortization  and after  adjustments for  unconsolidated  partnerships  and
     joint  ventures.  Adjustments  for  unconsolidated  partnerships  and joint
     ventures are  calculated  to reflect Funds of Operations on the same basis.
     Funds From  Operations  does not represent  cash  generated  from operating
     activities in accordance with generally accepted accounting  principles and
     is not  necessarily  indicative  of cash  available  to fund cash needs and
     should not be  considered an  alternative  to net income as an indicator of
     the Company's operating  performance or as an alternative to cash flow as a
     measure of liquidity or of ability to make  distributions.  Our calculation
     of FFO may differ from that used by other  companies  and,  therefore,  the
     amounts disclosed above for FFO may not be comparable directly to similarly
     titled measures used by other companies.

(4)  Before minority interest and distributions to Preferred Stockholders.

                                       14

<PAGE>



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

Overview

         The  following  discussion  should  be read  in  conjunction  with  the
Financial  Statements  and notes thereto of the Company  appearing  elsewhere in
this Annual Report. Dollars are in thousands except per share data.

         Certain  information  included in the following section of this report,
other than historical information, may contain forward-looking statements within
the  meaning  of the  Private  Securities  Litigation  Reform  Act of 1995.  The
forward- looking statements are identified by terminology such as "may", "will",
"believe",  "expect",  "estimate",  "anticipate",  "continue", or similar terms.
Although  the  Company  believes  that  the   expectations   reflected  in  such
forward-looking statements are reasonable,  actual results may differ materially
from those projected in the forward-looking statements.

Comparison  of the Year Ended  December 31, 1999 to the Year Ended  December 31,
1998

         For the year ended  December 31, 1999,  net income  allocated to common
stockholders increased by $1,645 or 17% from $9,681 to $11,326, when compared to
the year ended December 31, 1998,  primarily due to increases in revenues offset
by an increase in expenses,  a loss in 1999 versus a gain in 1998 on the sale of
properties,  a loss in 1999 versus income in 1998 from the  Management  Company,
and an increase in the amount of income allocated to minority interests.

         Total revenues  increased by $13,464 or 18.2%, from $74,064 to $87,528,
due   primarily  to  an  increase  in  minimum   rents  of  $10,390  and  tenant
reimbursements  of $2,701.  The increases  were primarily due to the purchase of
Watkins  Park Plaza in March  1998,  Parkville  Shopping  Center in April  1998,
Elkridge  Corners and Village  Center in June 1998,  Willston  Centres I & II in
October  1998  and  Town  Center  at  Sterling  in  November   1998  (the  "1998
Acquisitions"),  (resulting in partial year revenues  being included in the year
ending  December 31, 1998),  Kamp  Washington in January 1999,  Newark  Shopping
Center in August  1999,  Saratoga  Shopping  Center in  October  1999,  Woodmoor
Shopping Center in November 1999, and Westmont  Shopping Center,  Cudahy Center,
Racine Centre and Whitnall  Square in December  1999 (the "1999  Acquisitions").
Total revenues increased by $11,044 due to the 1998 and 1999 Acquisitions offset
by a decrease of $625 due to properties sold during 1998 and 1999. Minimum rents
increased  by $8,886 and tenant  reimbursements  increased  by $1,711 due to the
purchase of the 1998 and 1999 Acquisitions. For properties owned for all of 1998
and  1999,  total  revenues  increased  by $2,337  (3.5 %).  This  increase  was
primarily  due  to  increases  in  minimum  rents  of  $960  (1.9%)  and  tenant
reimbursements of $990 (7.8%).

         Property  operating and  maintenance  expense  increased by $2,206,  or
12.3%, from $17,934 to $20,140, due primarily to the 1998 and 1999 Acquisitions.
Operating and  maintenance  expenses  increased by $2,074 due to the purchase of
the 1998 and 1999  Acquisitions  offset by a decrease of $378 due to  properties
sold during 1998 and 1999. For properties  owned for all of 1998 and 1999, total
operating  and  maintenance  expense  increased  by  $504  (3.1%).  General  and
administrative  expenses  increased by $372 or 9.8%, from $3,789 to $4,161,  due
primarily  to  increases  in officers  bonuses of $145,  write off of  abandoned
project costs of $148 and internal acquisition costs of $131 (prior to March 19,
1998,  internal  acquisition  costs were capitalized and included in the cost of
the acquired property), offset by a decrease in legal fees of $81.

         Interest expense increased by $1,515, or 7.6%, from $19,966 to $21,481,
due primarily to the increase in assumed mortgage  indebtedness  associated with
the 1999  Acquisitions  ($19,213),  net  borrowings  under  the  Line of  Credit
($34,800) and excess  refinancing  proceeds  ($13,723),  offset by a decrease in
indebtedness due to the conversion of the  Exchangeable  Debentures to Preferred
Stock  ($25,000),  the Sale of Pheasant  Hill  ($7,539) and the  curtailment  of
mortgage debt ($6,193).  The weighted  average debt  outstanding  increased from
$251.0  million in 1998 to $280.0  million  in 1999,  and the  weighted  average
interest rate decreased from 8.0% to 7.7%.

         Depreciation and amortization  expenses  increased by $2,358, or 16.1%,
from $14,627 to $16,985, primarily due to the 1998 and 1999 Acquisitions.

         During 1999, a loss on the sale of  properties of $495 was realized due
to the sale of Pheasant  Hill in  December.  During  1998, a gain on the sale of
properties of $2,371 was realized due to the sale of  Branchwood  and Park Place
Apartments in March 1998  ($1,536),  the sale of a Georgetown  property in March
1998 ($147), the sale of a Georgetown  property in September 1998 ($335) and the
sale of a Georgetown  property in December 1998 ($353).  During 1998, the Mellon
Bank and  Corestates  Lines of Credit were retired with  proceeds from the Union
Bank of  Switzerland  ("UBS AG") Line of Credit  and $3,826 of debt was  retired
early  due to the sale of Park  Place  Apartments  resulting  in a loss on early
extinguishment of debt of $358.

                                       15

<PAGE>




         Income allocated to minority  interests  increased by $1,196, or 26.5%,
from $4,602 to $5,717 due to an increase in net income,  offset by a decrease in
the minority  interests  ownership of the  Operating  Partnership  from 27.0% to
26.1%.

         Net cash flow provided by operating  activities  increased from $27,148
in 1998 to  $39,230  in 1999,  primarily  due to the 1999  Acquisitions  and the
realization of a full year of operations from the 1998 Acquisitions and improved
property performance. Net cash flows used in investing activities increased from
$28,230 in 1998 to $42,551 in 1999  primarily due to a decrease in the amount of
property  acquisitions financed through the use of assumed mortgage indebtedness
and the issuance of Common Units  during  1999.  Net cash  provided by financing
activities  increased from $1,103 in 1998 to $4,490 in 1999, primarily due to an
increase  in  Line  of  Credit  proceeds  used  for the  acquisition  of  rental
properties and an increase in proceeds from mortgage notes refinancing offset by
a  reduction  in  proceeds  from the  issuance  of common  stock.  In 1998,  the
acquisition  of rental  properties  was more heavily  financed  through  assumed
mortgage indebtedness and the issuance of Common Units.

Comparison  of the Year Ended  December 31, 1998 to the Year Ended  December 31,
1997

         For the year ended  December 31, 1998,  net income  allocated to common
stockholders  increased  by $7,712 from $1,969 to $9,681,  when  compared to the
year ended  December 31, 1997,  primarily due to increases in revenues and gains
on the sale of properties,  and a decrease in extraordinary  losses offset by an
increase  in  expenses  and an  increase  in the amount of income  allocated  to
minority interests.

         Total revenues increased by $18,430, or 33.1%, from $55,634 to $74,064,
due   primarily  to  an  increase  in  minimum   rents  of  $12,845  and  tenant
reimbursements  of $4,670.  The increases  were primarily due to the purchase of
Ashburn  Farm  Village  Shopping  Center in March 1997,  the six  properties  in
Chicago in September 1997, Mitchellville Plaza in October 1997 and Spring Valley
Shopping Center in December 1997 (the "1997 Acquisitions") (resulting in partial
year revenues being  included in the year ended December 31, 1997),  Bowie Plaza
in January 1998, Watkins Park Plaza in March 1998,  Parkville Shopping Center in
April 1998, Elkridge Corners and Village Center in June 1998, Willston Centres I
& II in October  1998 and Town Center at  Sterling  in November  1998 (the "1998
Acquisitions").  Total  revenues  increased  by $18,719 due to the 1997 and 1998
Acquisitions  offset by a decrease in total revenues of $1,701 due to properties
sold  during  1997 and 1998.  Minimum  rents  increased  by  $13,828  and tenant
reimbursements  increased by $4,229 due to the 1997 and 1998  Acquisitions.  For
properties owned for all of 1997 and 1998,  total revenues  increased by $1,449,
(3.0%).  This  increase was  primarily due to increases in minimum rents of $900
(2.4%) and tenant reimbursements of $451 (5.5%).

         Property  operating and  maintenance  expense  increased by $4,412,  or
32.6%, from $13,522 to $17,934, due primarily to the 1997 and 1998 Acquisitions.
Operating and  maintenance  expenses  increased by $5,104 due to the purchase of
the 1997 and 1998  Acquisitions  offset by a decrease of $804 due to  properties
sold during 1997 and 1998. For properties  owned for all of 1997 and 1998, total
operating  and  maintenance  expense  increased  by  $111  (1.0%).  General  and
administrative  expenses increased by $426, or 12.7%, from $3,363 to $3,789, due
primarily to increases in miscellaneous administrative costs of $222, legal fees
of $135, write off of abandoned  project costs of $75, and internal  acquisition
costs  of $428  (prior  to March  19,  1998,  internal  acquisition  costs  were
capitalized  and  included in the cost of the  acquired  property),  offset by a
decrease in officers bonuses of $434.

         Interest expense increased by $1,550, or 8.4%, from $18,416 to $19,966,
due primarily to the increase in mortgage  indebtedness  of $100,135  associated
with the 1997 Acquisitions ($64,614) and the 1998 Acquisitions ($35,521), offset
by a decrease in mortgage  and Line of Credit  indebtedness  of $30,017  retired
with the proceeds of the sale of properties  and a public  offering of 1,150,000
shares of Common Stock in July 1998 (the "July 1998 Offering"). The average debt
outstanding increased from $216.6 million in 1997 to $251.0 million in 1998, and
the weighted average interest rate decreased from 8.5% to 8.0%.

         Depreciation and amortization  expenses  increased by $3,455, or 30.9%,
from $11,172 to $14,627, primarily due to the 1997 and 1998 Acquisitions.

         During  1998, a gain on the sale of  properties  of $2,371 was realized
due to the sale of Branchwood and Park Place  Apartments in March 1998 ($1,536),
the sale of a Georgetown property in March 1998 ($147), the sale of a Georgetown
property  in  September  1998  ($335) and the sale of a  Georgetown  property in
December 1998 ($353).  During 1997, a gain on the sale of properties of $549 was
realized  from the sale of Thieves  Market ($45) and a portion of Laburnum  Park
($504).  During 1998 the Mellon Bank and Corestates Lines of Credit were retired
with  proceeds of the UBS AG Line of Credit and $3,826 of debt was retired early
due to the sale of Park Place Apartments resulting in a loss

                                       16

<PAGE>



on early  extinguishment  of debt of $358.  During  1997,  debt in the amount of
$46,375 was retired with proceeds of the September  1997 common stock  offering,
resulting in loss on early extinguishment of debt of $954.

         Income allocated to minority interests  increased by $2,942 from $1,579
to $4,521  due to an  increase  in net income and an  increase  in the  minority
interests ownership of the Operating Partnership from 20.7% to 27.0%.

         Net cash flow provided by operating  activities  increased from $23,441
in 1997 to  $27,149  in 1998,  primarily  due to the 1998  Acquisitions  and the
realization of a full year of operations from the 1997 Acquisitions and improved
property performance. Net cash flows used in investing activities increased from
$25,869 to $28,230 in 1998 primarily due to a decrease in the amount of property
acquisitions  financed through the use of assumed mortgage  indebtedness  during
1998.  Net cash flow from  financing  activities  changed  from net cash used in
financing  activities of $6,390 to net cash provided by financing  activities of
$1,103  primarily  due to an  increase in Line of Credit  proceeds  used for the
acquisition of rental properties.  In 1997, the acquisition of rental properties
was more heavily financed through assumed mortgage indebtedness and the issuance
of Common Units.

Liquidity and Capital Resources

         In 1999, the Company  continued to expand its portfolio of neighborhood
shopping  centers.  During the year, the Company acquired eight shopping centers
for an aggregate  acquisition cost of $63,078.  The acquisitions  were primarily
located in the metropolitan areas of Washington, D.C. and Milwaukee,  Wisconsin,
a new market for the Company. The acquisitions increased the Company's portfolio
by 848,688  square  feet.  The Company  financed  the  acquisitions  through the
issuance of Common Units with an  aggregate  value of $5,922,  assumed  mortgage
indebtedness of $19,213,  and cash of $37,943. The cash was provided by draws on
the Company's  Line of Credit,  proceeds from the sale of properties and cash on
hand.

         The Company  also sold one  property  (Pheasant  Hill)  during the year
resulting in net proceeds of $1,291 after the repayment of associated debt.

         During 1999,  $88,933 of  indebtedness  matured  including  the $25,000
Exchangeable Debentures.  The Company refinanced this debt primarily through six
separate loans  aggregating  $75,000 with  Metropolitan  Life Insurance  Company
("Met Life") and the  conversion  of the  Exchangeable  Debentures  to 1,000,000
shares of  Preferred  Stock.  The Met Life loans are  non-recourse  and are each
secured by one property.  Part of this transaction included the closing of three
swap contracts that the Company had in place in  anticipation of this financing.
The Company paid the Counter Party approximately  $3,200 to close the contracts.
This cost was  capitalized  and is being amortized over the life of the Met Life
loans. The following is a summary of the transaction:
<TABLE>
<CAPTION>
                                                                                      Coupon
         Loan Amount           Collateral                         Term (years)     Interest Rate    All-In Rate (1)
         -----------           ----------                         ------------     -------------    ---------------
<S>                         <C>                                         <C>             <C>              <C>
          $10,700           Davis Ford Crossing                         10              6.79%            7.21%
           13,700           First State Plaza                           10              6.79%            7.23%
           11,800           Fox Mill Shopping Center                    12              6.84%            7.37%
           10,900           Mallard Creek Shopping Center               10              6.85%            7.35%
            6,700           McHenry Commons                             10              6.85%            7.35%
           21,200           Valley Centre                               12              6.84%            7.21%
           ------                                                                      ------            -----

          $75,000                                                                       6.83%            7.27%
          =======                                                                      ======           ======
</TABLE>

(1)   Includes the  amortization  of costs to close out the  interest  rate swap
      contracts, mortgage loan fees and other closing costs over the life of the
      loans using the effective interest rate.

         During  1999,  the  Company  completed  the  renovation  of four of its
properties (City Avenue,  Newtown Square,  Mallard Creek, and Stonebrook) for an
aggregate  cost of  approximately  $1,938.  The  renovation  of  Newtown  Square
included the  expansion  of the Acme  Supermarket  from 35,282  square to 56,226
square feet.

         During  2000,  the  Company  expects  to  renovate  a  minimum  of four
properties for an aggregate  cost of $4,875.  The  renovations  will include the
expansion of A&P Superfresh at Parkville  Shopping Center by 22,500 square feet.
These expansions and renovations are expected to be financed  primarily  through
draws on the Company's Line of Credit.


                                       17

<PAGE>



         The Company expects to continue its renovation and acquisition  program
for the  remainder  of 2000.  However,  the  level  of  future  acquisitions  is
dependent on the  Company's  ability to raise  additional  capital  through debt
proceeds, equity offerings and the issuance of Common Units.

Indebtedness

         The  following  table  sets forth  certain  information  regarding  the
indebtedness of the Company as of December 31, 1999:
<TABLE>
<CAPTION>

                                                                                   Maturity
Mortgage Loans                           Interest Rate (1)    Balance (2)           Date (3)
--------------                           -----------------    -----------        -----------
<S>                                             <C>           <C>                  <C>   <C>
Ashburn Farm Village (4)                        7.38%         $   6,537            01/01/01
Allen St. & Stefko Boulevard (5)                8.41%             5,714            01/31/06
Bowie Plaza                                     6.98%             4,703            12/01/09
Chesapeake Bagel Building                       6.54%               735            07/01/01
City Avenue Shopping Center                     8.13%             9,581            10/18/05
Clopper's Mill                                  7.27%            13,627            03/21/06
Davis Ford Crossing                             7.21%            10,617            06/01/09
Elkridge Corners                                7.68%             6,322            11/01/10
Festival at Woodholme                           9.83%            11,238            04/01/00
Firstfield Shopping Center                      7.50%             2,416            12/01/05
First State Plaza                               7.23%            13,594            06/01/09
Fox Mill Shopping Center                        7.37%            11,724            08/01/11
Kamp Washington                                 7.26%             2,979            10/01/02
Kings Park Shopping Center                      8.02%             4,458            11/01/14
McHenry Commons                                 7.35%             6,640            05/01/09
Mallard Creek                                   7.35%            10,802            05/01/09
Mayfair Shopping Center (6), (7)                5.43%             6,650            06/24/10
Mitchellville Plaza                             7.34%            14,249            06/24/05
Newark Shopping Center                          7.82%             9,337            11/01/07
Northway Shopping Center                        7.96%             6,043            01/01/07
Parkville Shopping Center                       7.14%             3,409            03/01/08
Potomac Plaza(8)                                8.00%             2,579            11/01/04
Saratoga                                        9.58%             6,776            06/01/01
Shoppes of Kildaire                             7.89%             7,358            05/31/06
Southside Marketplace                           8.76%             7,848            08/01/05
Stonebrook Plaza                                7.24%             5,770            07/15/00
The Oaks                                        7.40%             9,242            05/01/03
Town Center at Sterling                         7.02%             8,847            07/01/03
Valley Centre                                   7.75%               525            06/30/07
Valley Centre                                   7.21%            21,037            06/01/11
Various/UDRT                                    8.72%            12,627            10/31/05
Willston Centre II                              7.02%            10,132            10/01/02
Revolving Line of Credit (9)                    8.00%            44,000            02/01/01
                                               ------            ------

 TOTALS                                         7.70%          $298,116
                                                =====          ========
</TABLE>

(1)  The effective interest rate includes the amortization of deferred financing
     costs and premiums over the term of the respective loan.
(2)  Includes  premiums  on the  assumption  of  mortgage  debt in the amount of
     $5,081.
(3)  Many of the outstanding mortgages contain prepayment  penalties,  typically
     calculated using a yield maintenance formula.
(4)  The interest  rate is adjusted  monthly based on the 30-day LIBOR rate plus
     1.50%.
(5)  This  debt is  collateralized  by  these  two  properties.  The loan can be
     extended through January 11, 2021. The interest rate adjusts to the greater
     of the initial interest rate plus five percentage points or the T-bill rate
     plus five percentage points.
(6)  The debt service on this mortgage loan is determined  based upon a variable
     rate of  interest,  plus a letter of credit  enhancement  fee of 1.5%.  The
     variable  interest  rate is  determined  weekly  at the rate  necessary  to
     produce a bid in the process of remarketing the Bond  Obligations  equal to
     par plus accrued interest, based on comparable issues in the market.
(7)  This  debt  matures  in the  year  2010.  However,  the  letter  of  credit
     enhancement expires in June 2003.
(8)  The interest  rate is adjusted  monthly based on the 30-day LIBOR rate plus
     2.25%.

                                       18

<PAGE>



(9)  The interest  rate is adjusted  monthly based on the 30-day LIBOR rate plus
     1.0%. The Company has in place a LIBOR Cap of 6.5% on $30,000 through April
     1, 2000.


         As of  December  31,  1999,  the Company  had total  mortgage  notes of
approximately   $298,116,   which   consisted  of   approximately   $291,466  in
indebtedness  collateralized  by 41 of the Retail Properties and tax-exempt bond
financing  obligations  issued  by the  Philadelphia  Authority  for  Industrial
Development (the "Bond Obligations") of approximately  $6,650  collateralized by
one of the Retail Properties. Of the Company's indebtedness,  $59,766 (20.0%) is
variable  rate  indebtedness  and  $238,350  (80.0%)  is at a  fixed  rate.  The
indebtedness  has interest  rates  ranging from 6.54% to 9.83%,  with a weighted
average  interest rate of 7.7%,  and will mature  between 2000 and 2014,  with a
weighted average  remaining term to maturity of 5.5 years.  Approximately 25% of
the Company's  indebtedness will become due by 2001,  requiring balloon payments
of $16,933 in 2000 and $57,680 in 2001. From 2000 through 2014, the Company will
have to  refinance an aggregate  of  approximately  $245,490.  Since the Company
anticipates that only a small portion of the principal of such indebtedness will
be repaid  prior to  maturity  and the Company  will likely not have  sufficient
funds on hand to repay such  indebtedness,  the Company  will need to  refinance
such indebtedness  through  modification or extension of existing  indebtedness,
additional debt financing or through additional offering of equity securities.

         The Company has entered into a forward  interest rate swap contract and
intends to hold such contract until its expiration date. The purpose of the swap
is to mitigate any exposure to fluctuations in interest rates until the maturity
dates of the mortgages when the Company expects to refinance these loans.  Under
the terms of the swap contract, the Company pays a fixed rate to the other party
to the contract  ("Counter  Party") while receiving  variable  payments from the
Counter Party based on the 30-day LIBOR rate. This  effectively  fixes the LIBOR
rate for the Company during the period of the swap contract.  The following is a
summary of the Company's swap contract as of December 31, 1999:

<TABLE>
<CAPTION>
Notional Amount      Date of Agreement      Period of Contract       Fixed Rate Payable     Fair Market Value
---------------      -----------------      ------------------       ------------------     -----------------
  (In 000'S)                                                                                   (In 000'S)

<S>                        <C>              <C>                            <C>                   <C>
    $24,000                01/98            05/01/00 - 05/02/05            5.85%                 $1,028
</TABLE>

Line of Credit

         The Company has a  collateralized  revolving  Line of Credit of $51,000
with UBS AG. This line is  collateralized  by seven properties  (Kenhorst Plaza,
Shoppes of Graylyn,  Four Mile Fork,  Takoma  Park,  Centre  Ridge  Marketplace,
Watkins Park Plaza and Newtown Square). The line matures on January 31, 2001 and
loans  under  this line will bear  interest  at the  30-day  LIBOR rate plus one
percent (1%). As of December 31, 1999, there was $44,000  outstanding  under the
Line of Credit.

         The Line of  Credit is  available  to fund  acquisitions,  renovations,
expansions and other working capital  requirements.  Definitive  agreements with
respect to the Line of Credit contain customary representations,  warranties and
covenants.

Liquidity

         The  Company  expects  to meet its  short-term  liquidity  requirements
generally through its working capital, net cash provided by operations, draws on
its  Line  of  Credit  and  the  leveraging  of  currently  unencumbered  Retail
Properties. The Company believes that the foregoing sources of liquidity will be
sufficient to fund liquidity for the foreseeable future.

         The Company expects to meet certain  long-term  liquidity  requirements
such  as  development,   property   acquisitions,   scheduled  debt  maturities,
renovations,  expansions and other non-recurring  capital  improvements  through
long-term secured and unsecured  indebtedness,  including the Line of Credit and
the issuance of additional equity and debt securities.  The Company also expects
to  use  funds  available  under  the  Line  of  Credit  to  fund  acquisitions,
development activities and capital improvements on an interim basis.

                                       19

<PAGE>



Other

Year 2000 Issue

         The "Year 2000 issue" is the result of many existing  computer programs
using only the last two  digits to refer to a year.  Therefore,  these  computer
programs may not property  recognize a year that begins with "20" instead of the
familiar "19". If not corrected, many computer applications could fail or create
erroneous results.

         The  Company  developed  a Year 2000  Compliance  Plan ("The  Plan") to
address these issues and incurred  approximately  $100 in the  implementation of
the Plan.  These costs have  primarily been incurred to upgrade the desktop PC's
at the Company's home office.  The Company budgeted $500 to replace its previous
accounting  and  property  management  software  system.  Although  the  Company
believes  that the  previous  system was  materially  Year 2000  compliant,  the
Company  decided to migrate  because of the improved  technology  and  reporting
capabilities  of the new  system.  The  Company  went live on the new  system on
October  1,  1999.  Approximately  $400 has been  incurred  including  software,
hardware and implementation costs. The costs were funded from the Company's cash
flow. The Company has not experienced any operational  problems  relating to the
Year 2000 issue and does not expect any such problems to occur throughout 2000.

Inflation and Economic Conditions

         Most of the Company's leases contain  provisions  designed to partially
mitigate the adverse impact of inflation.  Such  provisions  include  escalation
clauses with fixed  increases  or  increases  related to changes in the Consumer
Price Index or similar  inflation  indices.  The leases may also contain clauses
enabling the Company to receive  percentage  rents based on tenant's gross sales
above predetermined levels, which generally increase as prices rise. Most of the
Company's  leases  require the tenant to pay its pro rata share of the  property
operating  expenses,  including common area  maintenance,  real estate taxes and
insurance,  thereby  reducing the  Company's  exposure to increases in costs and
operating   expenses  resulting  from  inflation.   In  addition,   the  Company
periodically evaluates its exposure to interest rate fluctuations, and may enter
into interest rate protection  agreements which mitigate,  but do not eliminate,
the effect of changes in interest rates on its floating rate loans. The Company,
as a general policy, endeavors to obtain fixed rate financing.

         The  Company's  financial  results  are  affected  by general  economic
conditions  in the  markets in which its  properties  are  located.  An economic
recession,  or other adverse  changes in general or local  economic  conditions,
could result in the  inability of some  existing  tenants of the Company to meet
their lease  obligations  and could  otherwise  adversely  affect the  Company's
ability to attract or retain  tenants.  The Company's  properties  are typically
anchored by supermarkets,  drug stores and other consumer  necessity and service
retailers which usually offer day-to-day  necessities  rather than luxury items.
These types of tenants,  in the  experience of the Company,  generally  maintain
more consistent sales performance during periods of adverse economic conditions.

New Accounting Standards

         On March 19,  1998,  the  Emerging  Issues  Task Force  ("EITF") of the
Financial  Accounting  Standards  Board  reached a  consensus  opinion  on issue
No.97-11,  "Accounting  for  Internal  Costs  Relating to Real  Estate  Property
Acquisitions"   which  requires  that  the  internal  costs  of   preacquisition
activities  incurred in connection with the acquisition of an operating property
be expensed as incurred.  The Company has historically  capitalized internal pre
acquisition  cost of  operating  properties  as a component  of the  acquisition
price.  The Company  capitalized $227 for the period January 1 through March 19,
1998 and $229 for the twelve months ended  December 31, 1997. For 1999 and 1998,
the expense was $558 and $428, respectively. The Company experienced an increase
in general and administrative expense due to the adoption of this ruling.

         On June 16, 1998,  the  Financial  Accounting  Standards  Board "FASB",
issued  Statement No. 133  "Accounting  for Derivative  Instruments  and Hedging
Activities"  (SFAS 133),  as amended by SFAS 137,  which is effective for fiscal
years beginning after June 15, 2000. This statement  establishes  accounting and
reporting standards requiring that every

                                       20

<PAGE>



derivative  instrument,  including certain  derivative  instruments  imbedded in
other  contracts,  be  recorded  in the  balance  sheet  as  either  an asset or
liability  measured at its fair value.  The statement also requires that changes
in the  derivative's  fair value be recognized in earnings unless specific hedge
accounting  criteria are met. The Company is currently  assessing  the impact of
this new  statement  on its  consolidated  financial  position,  liquidity,  and
results of operations.

         On December 6, 1999,  the Securities  and Exchange  Commission  ("SEC")
issued Staff  Accounting  Bulletin No. 101,  "Revenue  Recognition  in Financial
Statements"  (SAB 101),  which is effective for all periods  after  December 31,
1999. SAB 101 establishes that contingent  rental income should accrue only when
the  changes in the  factors on which the  contingent  lease  payment  are based
actually  occur.  Management  plans to adopt  this  standard  for all  reporting
periods subsequent to December 31, 1999.  Management has not assessed the impact
of the  adoption  of SAB 101 due to the  variability  of the terms  under  which
contingent rentals may occur.

Item 7a.  Qualitative and Quantitative Disclosures About Market Risk

         The  Company is exposed to certain  financial  market  risks,  the most
predominant being fluctuations in interest rates. Interest rate fluctuations are
monitored  by  management  as an integral  part of the  Company's  overall  risk
management program,  which recognizes the  unpredictability of financial markets
and seeks to reduce the potentially adverse effect on the Company's results. The
Company's  interest  rate risk  management  objective  is to limit the impact of
interest  rate  changes on  earnings  and cash  flows and to lower it's  overall
borrowing  costs.  To achieve  these  objectives,  from time to time the Company
enters into interest  rate hedge  contracts  such as swap and cap  agreements in
order to mitigate  interest rate risk with respect to various debt  instruments.
The Company  does not hold or issue these  derivative  contracts  for trading or
speculative purposes. The effect of interest rate fluctuations  historically has
been small relative to other factors affecting operating results, such as rental
rates and occupancy.

         The  Company's  operating  results are  affected by changes in interest
rates on  variable  rate  borrowings  including  the  Company's  Line of  Credit
facility as well as other  mortgages and notes with variable  interest rates. If
interest rates increased by 100 basis points, the Company's 1999 and 1998 annual
interest expense would have increased by $349 and $220,  respectively,  based on
balances  outstanding  during the years ending  December 31, 1999 and 1998.  The
following is a summary of the Company's long term debt as of December 31, 1999:
<TABLE>
<CAPTION>

                   Expected Maturity Date of Balloon Payments
                                                                                                          Fair Value
                                                                                                        of Debt as of
                               2000        2001         2002     2003       2004  Thereafter    Total      12/31/99
                          ---------  ----------    --------- --------  ---------  ---------- -----------  ---------
<S>                         <C>          <C>          <C>     <C>       <C>        <C>        <C>          <C>
FIXED RATE (1)              $16,933      $7,237      $11,843  $14,926   $     -    $138,455   $189,394     $222,585
--------------

  Average Interest Rate         9.0%        9.3%         7.1%     7.2%      n/a         7.6%       7.7%

VARIABLE RATE

LIBOR-based(2):

     Potomac Plaza (LIBOR
        plus 2.25%)                                                       2,418                  2,418        2,418
     Line of Credit (LIBOR
           plus 1.0% )(3)                44,000                                                 44,000       44,000
     Ashburn Farms (LIBOR
        plus 1.5%)                        6,443                                                  6,443        6,443
                           --------    --------    --------   --------  -------    --------   --------      -------

Total LIBOR-based                 -      50,443           -          -    2,418           -     52,861        52,861
Tax-exempt:
     Mayfair Shopping
       Center (4)                                                                     3,235      3,235         3,235
                           --------    --------    --------   -------- --------    --------    -------       -------

Total variable rate debt          -      50,443           -         -     2,418       3,235     56,096        56,096
                           --------    --------    --------  --------  --------    --------   --------      --------
Total Debt                  $16,933     $57,680     $11,843   $14,926    $2,418    $141,690   $245,490      $278,681
</TABLE>

                                       21

<PAGE>

(1)  See the schedule of Indebtedness  in  Management's  Discussion and Analysis
     for rates on individual debt instruments.

(2)  At December 31, 1999 the 30-day LIBOR rate was 5.82%

(3)  This  schedule  assumes  that the Line of Credit is repaid by the  maturity
     date.

(4)  The interest rate is determined  weekly at the rate  necessary to produce a
     bid in the process of remarketing the obligation  equal to par plus accrued
     interest.  The Company also pays a 1.5% letter of credit enhancement fee to
     Mellon Bank.

     As of December 31, 1998, the Company's total expected balloon payments were
$229,548 with a fair value of $305,868 and an average interest rate of 7.8%.

     For a discussion of our interest rate hedge contracts in effect at December
31, 1999, see "Management's  Discussion and Analysis of Financial  Condition and
Results of Operations -- Liquidity and Capital  Resources --  Indebtedness."  If
interest rates increase by 100 basis points,  the aggregate fair market value of
these  interest rate hedge  contracts as of December 31, 1999 would  increase by
approximately  $944.  If  interest  rates  decrease  by 100  basis  points,  the
aggregate  fair  market  value of these  interest  rate  hedge  contracts  as of
December 31, 1999 would  decrease by  approximately  $950.  In addition,  we are
exposed to certain losses in the event of  nonperformance by the counter parties
under the hedge  contracts.  We expect these  counter  parties,  which are major
financial institutions,  to perform fully under these contracts. However, if the
counter  parties were to default on their  obligations  under the interest  rate
hedge contracts, we could be required to pay the full rates on our debt, even if
such rates were in excess of the rates in the contracts.

Item 8. Financial Statements and Supplementary Data

     Index to Consolidated  Financial Statements is included on Page F-1 of this
report.

Item  9.  Changes  in and  Disagreements  With  Accountants  On  Accounting  and
Financial Disclosures.

     None.






                                       22

<PAGE>



                                    PART III

Item 10.  Directors and Executive Officers of the Company*

Item 11.  Executive Compensation*

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

Item 13.  Certain Relationships and Related Transactions*

         *The  information  called for by Part III,  Items 10, 11, 12 and 13, is
hereby incorporated by reference to the Company's  definitive Proxy Statement to
be filed with the Securities and Exchange  Commission  within 120 days after the
year covered by this Form 10-K with respect to the Company's  Annual  Meeting of
Shareholders presently scheduled for May 12, 2000.

                                     PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports On Form 8-K

A.   The following documents are filed as part of this report.

     1.   The  Consolidated  Financial  Statements  of First  Washington  Realty
          Trust, Inc. and Subsidiaries.

          See  Index to Financial Statements on Page F-1 included herein.

     2.   Financial Statement Schedules.

          See  Index to  Financial  Statements  Schedule  on Page  F-1  included
          herein.

B.   Reports on Form 8-K

     1.   The Company  filed a Current  Report on Form 8-K on December  23, 1999
          reporting other events under Item 5.

C.   Exhibits - pursuant to Item 601 of Regulation S-K

     3.1  Articles of Incorporation  of the Company  (amendments and originals).
          (2)

     3.2  Amended and Restated Bylaws of the Company. (3)

     10.1 First Amended and Restated  Agreement of Limited  Partnership of First
          Washington Realty Limited Partnership. (4)

     10.2 Third Amended and Restated  Employment  Agreement  between the Company
          and William J. Wolfe, dated January 14, 2000. (1)

     10.3 Third Amended and Restated  Employment  Agreement  between the Company
          and Stuart J. Halpert, dated January 14, 2000. (1)

     10.4 Revolving  Credit  Agreement dated January 22, 1998 between Union Bank
          of Switzerland and First Washington Realty Limited Partnership. (5)

     21.1 List of Subsidiaries. (1)

                                       23

<PAGE>




     23.1 Consent of PricewaterhouseCoopers LLP. (1)

     27   Financial Data Schedule. (1)


(1)  Filed herewith

(2)  Incorporated  herin by reference  from the Company's  Annual Report on Form
     10-K for the year ended December 31, 1998.

(3)  Incorporated  herein by reference  from the Company's  Quarterly  Report on
     Form 10-Q for the quarter ended September 30, 1998.

(4)  Incorporated herein by reference from the Company's  Registration Statement
     on Form S-11 (No. 33-83960).

(5)  Incorporated  herein by reference from the Company's  Annual Report on Form
     10-K for the year ended December 31, 1997.



                                       24

<PAGE>





                                   SIGNATURES


         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the registrant has duly caused this amended report to be signed on its behalf by
the undersigned thereunto duly authorized.



                                          FIRST WASHINGTON REALTY TRUST, INC.



         Date:   March 30, 2000                    /s/ James G. Blumenthal
                                          --------------------------------
                                          By:     James G. Blumenthal
                                                  Executive Vice President and
                                                  Chief Financial Officer
                                                  March 30, 2000


                                       25

<PAGE>



                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                            Page
                                                                            ----
Financial Statements:

       Report of Independent Accountants.....................................F-2

       Consolidated Balance Sheets as of December 31, 1999 and 1998..........F-3

       Consolidated Statements of Operations for each of the three years
       in the period ended December 31, 1999.................................F-4

       Consolidated Statements of Changes in  Stockholders' Equity for
       each of the three years in the period ended December 31, 1999.........F-5

       Consolidated Statements of Cash Flows for each of the three years
        in the period ended December 31, 1999................................F-6

       Notes to Consolidated Financial Statements............................F-7



Financial Statement Schedules:

       II -- Valuation and Qualifying Accounts..............................F-25

       III -- Real Estate and Accumulated Depreciation......................F-26

All other  schedules are omitted because they are not applicable or the required
information is shown in the financial statements or notes thereto.




                                       F-1

<PAGE>





                        REPORT OF INDEPENDENT ACCOUNTANTS



To the Board of Directors and Stockholders
of First Washington Realty Trust, Inc.

         In our opinion,  the consolidated  financial  statements  listed in the
accompanying  index on page F-1 present fairly,  in all material  respects,  the
financial  position of First Washington  Realty Trust,  Inc. and Subsidiaries at
December 31, 1999 and 1998,  and the results of their  operations and their cash
flows for each of the three years in the period  ended  December  31,  1999,  in
conformity with accounting  principles  generally accepted in the United States.
In addition,  in our opinion,  the financial  statement  schedules listed in the
accompanying index on page F-1 present fairly, in all, respects, the information
set forth  therein  when read in  conjunction  with the  consolidated  financial
statements. These financial statements and financial statement schedules are the
responsibility of the Company's management;  our responsibility is to express an
opinion on these financial statements and financial statement schedules based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
auditing standards  generally accepted in the United States,  which require that
we plan and perform the audit to obtain  reasonable  assurance about whether the
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial   statements,   assessing  the  accounting  principles  used  and
significant  estimates made by management,  and evaluating the overall financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for the opinion expressed above.




PRICEWATERHOUSECOOPERS LLP



Baltimore, Maryland
February  9 , 2000





                                       F-2

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        AS OF DECEMBER 31, 1999 AND 1998
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                                                                                         1999            1998
                                                                                                 ------------    ------------


                                                                         ASSETS
<S>                                                                                              <C>             <C>
Rental properties:
  Land .......................................................................................   $    119,965    $    108,562
  Buildings and improvements .................................................................        495,031         447,584
                                                                                                 ------------    ------------
                                                                                                      614,996         556,146
  Accumulated depreciation ...................................................................        (67,029)        (51,475)
                                                                                                 ------------    ------------
  Rental properties, net .....................................................................        547,967         504,671

Cash and cash equivalents ....................................................................          4,332           3,163
Tenant receivables, net ......................................................................         11,750           9,463
Deferred financing costs, net ................................................................          5,137           1,921
Other assets .................................................................................         14,107          13,736
                                                                                                 ------------    ------------
          Total assets .......................................................................   $    583,293    $    532,954
                                                                                                 ============    ============

                                                          LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities:
  Mortgage notes payable .....................................................................   $    298,116    $    244,113
  Debentures .................................................................................           --            25,000
  Accounts payable and accrued expenses ......................................................         12,350          11,542
                                                                                                 ------------    ------------
          Total liabilities ..................................................................        310,466         280,655

Minority interest ............................................................................         66,267          66,218

Commitments and contingencies (note 11)

Stockholders' equity:
  Convertible  preferred  stock $.01 par value;
  10,000,000  shares  authorized, 3,800,000   shares  designated;
  2,359,202,  and 2,314,189 shares issued and
     outstanding, liquidation value of $25.00 per share ......................................             24              23
  Common stock $.01 par value; 90,000,000 shares
     authorized; 9,709,670 and 8,566,985 shares issued and
     outstanding, respectively ...............................................................             97              86
  Additional paid-in capital .................................................................        245,054         218,345
  Accumulated distributions in excess of earnings ............................................        (38,615)        (32,373)
                                                                                                 ------------    ------------
          Total stockholders' equity .........................................................        206,560         186,081
                                                                                                 ------------    ------------
          Total liabilities and stockholders' equity .........................................   $    583,293    $    532,954
                                                                                                 ============    ============
</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements.


                                       F-3

<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                    (AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                                                                       1999        1998        1997
                                                                                   --------    --------    --------
<S>                                                                                <C>         <C>         <C>
Revenues:
     Minimum rents .............................................................   $ 67,092    $ 56,702    $ 43,857
     Tenant reimbursements .....................................................     16,877      14,176       9,506
     Percentage rents ..........................................................      1,709       1,613       1,060
     Other income ..............................................................      1,850       1,573       1,211
                                                                                   --------    --------    --------
         Total revenues ........................................................     87,528      74,064      55,634
                                                                                   --------    --------    --------

Expenses:
     Property operating and maintenance ........................................     20,140      17,934      13,522
     General and administrative ................................................      4,161       3,789       3,363
     Interest ..................................................................     21,481      19,966      18,416
     Depreciation and amortization .............................................     16,985      14,627      11,172
                                                                                   --------    --------    --------
         Total expenses ........................................................     62,767      56,316      46,473
                                                                                   --------    --------    --------

Income before gain (loss) on sale of properties,  income (loss)
     from  Management Company, minority interest, extraordinary
     item, and distributions to Preferred Stockholders .........................     24,761      17,748       9,161

Gain (loss) on sale of properties ..............................................       (495)      2,371         549

Income (loss) from Management Company ..........................................     (1,103)         82         433
                                                                                   --------    --------    --------

Income before minority interest, extraordinary item,
     and distributions to Preferred Stockholders ...............................     23,163      20,201      10,143

Income allocated to minority interest ..........................................     (5,717)     (4,602)     (1,743)
                                                                                   --------    --------    --------

Income before extraordinary item and distributions
     to Preferred Stockholders .................................................     17,446      15,599       8,400

Extraordinary item (net of minority interest) -
      Loss on early extinguishment of debt .....................................       --          (277)       (790)
                                                                                   --------    --------    --------

Net income .....................................................................     17,446      15,322       7,610

Distributions to Preferred Stockholders ........................................     (6,120)     (5,641)     (5,641)
                                                                                   --------    --------    --------

Net income allocated to Common Stockholders ....................................   $ 11,326    $  9,681    $  1,969
                                                                                   ========    ========    ========

Earnings per Common Share - Basic
     Income before extraordinary item ..........................................   $   1.25    $   1.25    $   0.49
     Extraordinary item ........................................................       --         (0.04)      (0.14)
                                                                                   --------    --------    --------
Net income .....................................................................   $   1.25    $   1.21    $   0.35
                                                                                   ========    ========    ========
Earnings per Common Share - Diluted
     Income before extraordinary item ..........................................   $   1.23    $   1.24    $   0.48
     Extraordinary item ........................................................       --         (0.04)      (0.14)
                                                                                   --------    --------    --------
Net income .....................................................................   $   1.23    $   1.20    $   0.34
                                                                                   ========    ========    ========

Weighted average Common Shares - Basic .........................................      9,086       7,978       5,663
Dilutive effect of stock options and common stock equivalents ..................         93          77          67
                                                                                   --------    --------    --------

Weighted average Common Shares - Diluted .......................................      9,179       8,055       5,730
                                                                                   ========    ========    ========
</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-4
<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                                       Accumulated
                                            Convertible                 Additional    Distributions
                                            Preferred     Common           Paid -     in Excess of
                                              Stock        Stock        in Capital       Earnings       Total
                                            ---------   -----------     ----------    -------------    -------

<S>                                           <C>          <C>          <C>             <C>            <C>
Balance, December 31, 1996                    $23          $49          $116,068        $(17,563)      $98,577

Net income                                                                                 7,610         7,610
Issuance of Common Stock
  (2,155,562 shares)                                        22            48,850                        48,872
Issuance of Common Stock for compensation
  (144,084 shares)                                           1             3,447                         3,448
Exercise of Stock Options (2,956 shares)                                      58                            58
Cash distributions to Common and
   Preferred Stockholders                                                                (16,556)      (16,556)
Exchange of Common Units for
 Common Shares (38,251 shares)                                               320                           320
Adjustment for minority interests'
  ownership of the Operating Partnership                                  10,613                        10,613
                                         --------    ---------            ------    ------------        ------

Balance, December 31, 1997                     23           72           179,356         (26,509)      152,942

Net income                                                                                15,322        15,322
Issuance of Common Stock
  (1,150,000 shares)                                        12            25,769                        25,781
Issuance of Common Stock for
 Compensation (10,000 shares)                                1               269                           270
Vesting of Restricted Shares
 for Compensation (25,290 shares)                            1               617                           618
Exercise of Stock Options
  (2,919 shares)                                                              56                            56
Cash distributions to Common and
   Preferred Stockholders                                                                (21,186)      (21,186)
Exchange of Common Units
 for Common Shares (100,456 shares)                                        1,297                         1,297
Adjustment for minority interests'
 ownership of the Operating Partnership                                   10,981                        10,981
                                          -------     --------            ------     -----------        ------

Balance, December 31, 1998                     23           86           218,345         (32,373)      186,081

Net income                                                                                17,446        17,446
Debenture Conversion (1,000,000 shares
 of Preferred Stock)                           10                         24,990                        25,000
Issuance of Common Stock for
 Compensation (25,000 shares)                                                536                           536
Vesting of Restricted Shares
 for Compensation (33,594 shares)                                            722                           722
Exercise of Stock Options
  (3,184 shares)                                                              62                            62
Cash distributions to Common and
   Preferred Stockholders                                                                (23,688)      (23,688)
Exchange of Common Units
 for Common Shares (58,915 shares)                           1               870                           871
Exchange of Preferred Units for
 Preferred Shares (3,840 shares)                1                             94                            95
Conversion of Preferred Stock
 to Common Stock (839,581 shares)              (8)          11                (3)                            0
Share Buyback (26,800 shares of Common Stock
 and 119,246 shares of Preferred Stock)        (2)          (1)           (3,333)                       (3,336)
Adjustment for minority interests'
 ownership of the Operating Partnership                                    2,771                         2,771
                                          -------     --------             -----     -----------         -----
Balance, December 31, 1999                    $24          $97          $245,054        $(38,615)     $206,560
                                              ===          ===          ========        =========     ========
</TABLE>

                   The accompanying notes are an integral part
                   of these consolidated financial statements.

                                       F-5
<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               FOR THE YEARS ENDED DECEMBER 31, 1999 1998 AND 1997
                             (DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                          1999             1998               1997
                                                                        --------         --------           -------
<S>                                                                      <C>              <C>                <C>
Operating activities:
Net Income                                                               $17,446          $15,322            $7,610
Adjustments to reconcile to net cash provided by operating activities:
       Income allocated to minority interest                               5,717            4,602             1,743
       Depreciation and amortization                                      16,985           14,627            11,172
       Loss (gain) on sale of rental properties                              495           (2,371)             (549)
       Loss on early extinguishment of debt                                    -              277               790
      Deferred financing costs and loan premiums                            (550)            (629)              979
       Loss recognized on investment of Management Company                 1,583              398                47
       Compensation paid or payable in Company stock                       1,203            1,284             1,866
       Provision for uncollectible accounts                                  521            1,993             1,285
       Recognition of deferred rent                                       (1,319)          (1,122)           (1,337)
       Net changes in:
             Tenant receivables                                           (1,489)          (3,060)           (2,582)
             Other assets                                                 (2,580)          (4,729)           (1,525)
             Accounts payable and accrued expenses                         1,218              556             3,942
                                                                           -----          -------         ---------

          Net cash provided by operating activities                       39,230           27,148            23,441
                                                                          ------         --------           -------

Investing activities:
       Acquisition of rental properties                                  (37,943)         (27,175)          (19,864)
       Additions to rental properties                                     (5,899)          (7,126)           (7,891)
       Proceeds from sale of rental properties                             1,291            6,071             2,066
                                                                        --------         --------        ----------

          Net cash used in investing activities                          (42,551)         (28,230)          (25,689)
                                                                        ---------        ---------         ---------

Financing activities:
       Proceeds from Line of Credit draws                                 58,000           38,138            23,800
       Proceeds from mortgage notes                                       13,723              318               398
       Proceeds from issuance of Common Stock                                  -           25,781            48,872
       Proceeds from exercise of Stock Options                                62               56                58
       Repayment of Line of Credit                                       (23,200)         (32,237)          (20,500)
       Repayment on mortgage notes                                        (4,666)          (3,325)          (38,704)
       Additions to deferred financing costs                              (4,194)            (639)             (686)
       Prepayment Penalties                                                    -              (56)             (169)
       Distributions paid to Preferred Stockholders                       (6,120)          (5,641)           (5,641)
       Distributions paid to Common Stockholders                         (17,568)         (15,545)          (10,915)
       Distributions paid to minority interest                            (8,211)          (5,747)           (2,903)
       Repurchase of Preferred and Common Shares                          (3,336)            -                 -
                                                                          ------           ------            ------

       Net cash provided by (used in) financing activities                 4,490            1,103            (6,390)
                                                                           -----          -------            ------
       Net increase (decrease) in cash and equivalents                     1,169               21            (8,638)
       Cash and equivalents, beginning of year                             3,163            3,142            11,780
                                                                         -------           ------           -------
       Cash and equivalents, end of year                                  $4,332           $3,163            $3,142
                                                                          ======         ========            ======
</TABLE>

                     The accompanying notes are an integral
                part of these consolidated financial statements.

                                       F-6
<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (dollars in thousands, except share data)
                                    ---------


1.   Organization and Business

         First  Washington  Realty  Trust,  Inc.  (the  "Company")  is  a  fully
integrated real estate organization that acquires,  manages,  leases,  renovates
and develops principally supermarket-anchored  neighborhood shopping centers. As
of December 31, 1999, the Company owned a portfolio of 62 retail properties (the
" Retail  Properties")  containing a total of  approximately  6.7 million square
feet of gross leasable area ("GLA")  located in the Mid- Atlantic region and the
Chicago, Illinois and Milwaukee, Wisconsin metropolitan areas.

         The Retail Properties are strategically  located neighborhood  shopping
centers principally  anchored by tenants such as Giant Food,  Safeway,  Shoppers
Food  Warehouse,  Food Lion,  A&P  Superfresh,  Winn Dixie,  Weis Markets,  Acme
Market, Dominick's Supermarket,  CVS/Pharmacy,  Walgreens,  Eckerd Drug and Rite
Aid.  Neighborhood  shopping  centers are typically  open-air centers ranging in
size from  50,000 to 150,000  square feet of GLA and  anchored  by  supermarkets
and/or drug stores. The Retail Properties range in size from approximately 3,000
square feet of GLA to  approximately  335,000  square  feet of GLA,  and average
approximately 108,000 square feet of GLA.

         The Company,  incorporated  in Maryland in April 1994, is  self-managed
and  self-administered  and has elected to be taxed as a real estate  investment
trust ("REIT") under the Internal Revenue Code of 1986, as amended (the "Code").

         The Company's  assets are held by, and all its operations are conducted
through,   First   Washington   Realty  Limited   Partnership   (the  "Operating
Partnership") and First Washington Management,  Inc. ("FWM"). The Company is the
sole general  partner of the  Operating  Partnership.  The limited  partners are
individuals,  partnerships  and others who have  contributed  their  property in
exchange for partnership interests ("Units").  The limited partners may exchange
their Units for cash, or at the option of the Company,  for stock of the Company
on a 1  for  1  basis.  At  December  31,  1999  and  1998,  the  Company  owned
approximately  74%  and 73% of the  Operating  Partnership,  respectively.  This
arrangement  is  commonly  referred to as an  Umbrella  Partnership  or "UPREIT"
structure. The Operating Partnership owns 100% of the non-voting preferred stock
of FWM  which  entitles  it to 99% of the cash  flow.  Certain  officers  of the
Company own 100% of the voting common stock of FWM which  entitles them to 1% of
the cash flow. In addition,  the Operating  Partnership  holds a FWM  promissory
note in the amount of $4,000 with  interest  payable  quarterly in the amount of
$120.  FWM provides  management,  leasing and related  services to the Operating
Partnership and also provides such services to 11 third-party clients consisting
of 21 properties  and 1.8 million  square feet of GLA. At December 31, 1999, the
Company  and  the  Operating  Partnership,  including  subsidiary  partnerships,
collectively owned 100% of the Retail Properties.  Due to the Company's ability,
as the general partner,  to exercise both financial and operational control over
the  Operating  Partnership,  the  Operating  Partnership  is  consolidated  for
financial reporting purposes. Allocation of net income and equity to the limited
partners of the Operating  Partnership is based on their respective  partnership
interests and is reflected in the accompanying Consolidated Financial Statements
as minority  interests.  Losses  allocable to the limited  partners in excess of
their basis are  allocated to the Common  Stockholders  as the limited  partners
have no requirement to fund losses.

         In September 1997 and July 1998, the Company completed public offerings
of Common  Stock of  2,070,000  shares  priced at $24.00 per share  raising  net
proceeds of $46,900, and 1,150,000 shares priced at $23.75 per sharing,  raising
net proceeds of $25,781,  respectively.  There were no offerings of Common Stock
during 1999.

         The  Company's  financial  results  are  affected  by general  economic
conditions  in the  markets in which its  properties  are  located.  An economic
recession,  or other adverse  changes in general or local  economic  conditions,
could result in the  inability of some  existing  tenants of the Company to meet
their lease  obligations  and could  otherwise  adversely  affect the  Company's
ability to attract  or retain  tenants.  The  Retail  Properties  are  typically
anchored by supermarkets,  drug stores and other consumer  necessity and service
retailers which usually


                                       F-7

<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------


offer day-to-day  necessities  rather than luxury items. These types of tenants,
in the  experience  of the Company,  generally  maintain more  consistent  sales
performance during periods of adverse economic conditions.


2.      Acquisition and Disposition of Rental Properties

         During  1999,  the  Company  acquired  eight  shopping  centers  for an
aggregate  acquisition cost of approximately  $63,078. All the acquisitions were
accounted for using the purchase method of accounting and the operations of each
property  are  included in the  Company's  Statement  of  Operations  from their
respective dates of acquisition. The following is a summary of the acquisitions:
<TABLE>
<CAPTION>

                                                                             TOTAL
           DATE                                                           ACQUISITION         ANCHOR         ANCHOR
         ACQUIRED   PROPERTY NAME          LOCATION               GLA         COST            TENANT           GLA
         --------   -------------          --------            --------     ---------         ------           ---

<S>       <C>       <C>                    <C>                   <C>        <C>              <C>             <C>
          01/99     Kamp Washington        Fairfax, VA           71,825     $15,184          Borders Books   30,000

          08/99     Newark Shopping Ctr.   Newark, DE           182,860      12,145          N/A

          10/99     Saratoga Shopping Ctr. Springfield, VA      101,587       9,818          Giant Food      39,187

          11/99     Woodmoor Shop. Ctr.    Silver Spring, MD     67,394       5,616          CVS              8,296

          12/99     Westmont Shopping Ctr. Hadden Township, NJ   52,640       1,656          ACME            34,240
                                                                                             CVS              9,100
          12/99     Cudahy Center          Cudahy, WI           103,254       2,804          Pick 'N Save    62,865
                                                                                             Walgreens       11,320
          12/99     Racine Centre          Mt. Pleasant, WI     135,827       8,064          Super Saver     50,979
                                                                                             Office Depot    31,117
          12/99     Whitnall Square        St. Francis, WI      133,301       7,791          Pick 'N Save    69,090
                                                                -------       -----
                                                                                             Walgreens       11,165
                                                                                                             ------

                                                                848,688     $63,078                         357,359
                                                                =======      ======                         =======

                    The acquisitions were funded as follows:

                    Assumed mortgage debt (including premiums)                                              $19,213
                    Market value of 289,068 Common Units issued                                               5,922
                    Cash                                                                                     37,943
                                                                                                             ------
                    Total                                                                                   $63,078
                                                                                                            =======
</TABLE>


         During  1998,  the  Company  acquired  eight  shopping  centers  for an
aggregate acquisition cost of approximately  $103,198. All the acquisitions were
accounted  for using the purchase  method of accounting  and  operations of each
property which are included in the Company's  Statement of Operations from their
respective dates of acquisition. The following is a summary of the acquisitions:



                                       F-8

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------

<TABLE>
<CAPTION>
                                                                              Total
         Date                                                              Acquisition       Anchor               Anchor
       Acquired     Property Name            Location              GLA         Cost          Tenant                 GLA
       --------     -------------            --------            --------    ---------       ------               -------

<S>      <C>        <C>                      <C>                 <C>         <C>             <C>                   <C>
         01/98      Bowie Plaza              Bowie, MD           104,836     $12,189         Giant                 21,750
                                                                                             CVS                   15,000
         03/98      Watkins Park Plaza       Mitchellville, MD   112,143      14,662         Safeway               43,205
                                                                                             CVS                   11,192
         04/98      Parkville Shopping Ctr.  Baltimore, MD       140,925       8,388         A&P Superfresh        18,750
                                                                                             Rite Aid               8,608
         06/98      Elkridge Corners         Baltimore, MD        73,529       8,862         A&P Superfresh        39,571
                                                                                             Rite Aid              10,408
         06/98      Village Center           Richmond, VA        110,885      13,305         Ukrop's Super Market  39,003
                                                                                             CVS                   11,700
         11/98      Willston Centre I        Falls Church, VA     86,468      10,382         CVS                   11,206
         11/98      Willston Centre II       Falls Church, VA    127,434      13,339         Safeway               42,491
         11/98      Town Center at Sterling  Sterling, VA        179,002      22,071         Giant Food            39,187
                                                                 -------      ------                               ------

                                                                 935,222    $103,198                              312,071
                                                                 =======     =======                              =======

                    The Acquisitions were funded as follows:

                    Assumed mortgage debt (including premiums)                                                   $ 35,521

                    Market value of 1,618,794 Common Units issued                                                  39,674
                    Deferred consideration                                                                            828
                    Cash                                                                                           27,175
                                                                                                                   ------
                    Total                                                                                        $103,198
                                                                                                                 ========
</TABLE>

         The deferred  consideration is due January 1, 2000 and is to be paid in
the  form  of  36,000  common   Operating   Partnership   Units.   The  deferred
consideration  was  determined  at the date of  acquisition  and was included in
determining the cost of the related acquisition.

         In 1999,  the Company sold one of its retail  properties.  During 1998,
the Company  sold its two  multifamily  properties  and three of its  Georgetown
properties. The following is a summary of the dispositions:
<TABLE>
<CAPTION>

                                                                                                          Gain
Date                                                                                   Sales             (Loss)
Sold     Property Name              Location                         GLA               Price             On Sale
----     -------------              --------                         ---               -----             -------
<S>      <C>                        <C>                            <C>                <C>                 <C>
1999
12/99    Pheasant Hill Plaza        Bolingbrook, IL                111,190            $9,200              ($495)
                                                                   =======            ======               ====

1998
03/98    Branchwood and             Charleston, SC                                    $8,050             $1,536
         Park Place Apartments

03/98    3269 M Street              Washington, DC                   5,000               750                147

09/98    3033 M Street              Washington, DC                   3,700               800                335

09/98    1328 Wisconsin Avenue      Washington, DC                   4,100             1,075                353
                                                                     -----             -----               ----

         Total 1998                                                 12,800           $10,675             $2,371
                                                                   =======             =====             ======
</TABLE>

                                       F-9

<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------


         The  following  unaudited  pro  forma  condensed  combined  results  of
operations  for the years ended  December 31, 1999 and 1998 are  presented as if
the  acquisitions  and sales of the rental  properties that occurred during 1999
and 1998 had occurred on January 1 of the period presented. In preparing the pro
forma data,  adjustments  have been made to assume  that the July 1998  Offering
occurred on January 1, 1998.  The pro forma  statements  are based on historical
information  and do not  necessarily  reflect the actual results that would have
occurred if the Company had owned the properties  for the periods  presented nor
are they necessarily indicative of future results of operations of the Company.

                                                    1999          1998
                                                  --------      ------
                                                       (unaudited)

Total revenues                                     $91,425       $85,998
                                                   =======       =======
Net income allocated to Common Stockholders        $11,857        $9,967
                                                   =======       =======
Earnings per common share - Basic                    $1.31         $1.17
                                                  ========     =========
Earnings per common share - Diluted                  $1.29         $1.15
                                                  ========     =========

3.   Summary of Significant Accounting Policies

Basis of Presentation

        The  consolidated  financial  statements  include  the  accounts  of the
Company,  the Operating  Partnership and other limited  partnerships and limited
liability companies which are majority owned by the Operating  Partnership.  All
significant intercompany balances and transactions have been eliminated.

        The Company's  investment in the preferred stock of FWM is accounted for
under the equity  method of  accounting.  In  addition to  receiving  fees under
third-party  management,  leasing and brokerage agreements,  FWM manages, leases
and provides other related services to all the properties owned by the Operating
Partnership and its affiliates in exchange for a fee.

Use of Accounting Estimates

        The  preparation  of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. These estimates involve judgments with respect to, among other
things,  various future economic  factors which are difficult to predict and are
beyond the control of the Company.  Therefore,  actual amounts could differ from
these estimates.

Rental Properties

         Rental  properties are carried at  depreciated  cost.  Depreciation  is
computed  on the  straight-line  basis over the  estimated  useful  lives of the
assets. The Company uses a 31.5 to 40 year estimated life for buildings and 5 to
40 year estimated life for capital improvements. Tenant improvement expenditures
are depreciated  over the term of the related lease.  Expenditures  for ordinary
maintenance and repairs are charged to operations as incurred, while significant
renovations and  improvements  that improve and/or extend the useful life of the
asset are capitalized and depreciated over the estimated useful life.

         In  determining  whether  there have been any  impairment  losses,  the
Company verifies that the property's net projected undiscounted cash flow before
debt service is sufficient to recover the cost of the asset.  An impairment loss
would result if the carrying value were greater than the cumulative undiscounted
net cash flow.  The amount of an impairment  would be calculated by  determining
the difference between the carrying value and the cumulative discounted net cash
flow.

                                      F-10

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    --------

Cash and Cash Equivalents

         All  demand,  money  market  accounts,   certificates  of  deposit  and
repurchase  agreement accounts with an original maturity of three months or less
at the date of purchase are considered to be cash and cash equivalents.

         The Company  places its temporary  cash  investments  with high quality
financial  institutions.   The  deposits  at  such  financial  institutions  are
guaranteed by the Federal Deposit Insurance  Corporation ("FDIC") up to $100. At
various  times  during the year,  the Company has deposits in excess of the FDIC
insurance  limit.  In  addition,  the Company is  required  to  maintain  escrow
deposits with certain lenders.  Such amounts which are included in other assets,
are also in excess of FDIC insurance limits.

Deferred Lease Costs

         Fees and  costs  incurred  to  initiate  and  renew  operating  leases,
including  amounts  incurred by FWM, are  amortized  over the lease term and are
included in other assets.


Deferred Financing Costs

         Costs of  interest  rate  caps,  interest  rate  swaps,  interest  rate
buydowns and fees incurred to obtain long- term  financing  are being  amortized
over the terms of the  respective  loans using the  effective  interest  method.
Unamortized deferred financing costs are charged to expense when debt is retired
before the maturity date.  Accumulated  amortization of deferred financing costs
at  December  31, 1999 and 1998 was $7,128 and  $8,022,  respectively.  Deferred
financing cost  amortization  which is included in interest  expense amounted to
$977, $1,148 and $1,546 during 1999, 1998 and 1997, respectively.

Interest Rate Swap and Cap Agreements

         Interest rate differential to be paid or received on interest rate swap
and cap agreements are  recognized as an adjustment to interest  expense.  Gains
and losses on terminated  interest  rate swaps and caps  accounted for as hedges
are  amortized  over the  remaining  lives of the  related  swaps and caps;  any
unamortized gain or loss in recognized when the underlying debt is terminated.

Revenue Recognition

         Rental income attributable to leases is recorded when due from tenants.
Certain of the leases provide for escalating base rents, which are recognized on
a straight-line basis over the term of the agreement. Rents accrued, but not yet
paid, are included in accounts receivable.  As of December 31, 1999 and 1998 the
amounts of these straight-line receivables were $6,720 and $5,685, respectively.
The  amount of rental  income  from the  straight-lining  of rents  amounted  to
$1,319, $1,122 and $1,337 for the years ended 1999, 1998 and 1997, respectively.
Certain of the leases also provide for additional  revenue to be paid based upon
the level of sales achieved by the lessee and are recorded as percentage  rents.
Additional rental revenue is recognized when it is probable that the lessee will
reach  the  established   level  of  sales.   Most  leases  provide  for  tenant
reimbursement of common area maintenance and other operating expenses.

         An  allowance  for  doubtful  accounts  has been  provided  against the
portion of tenant accounts  receivable  which is estimated to be  uncollectible.
Tenant accounts receivable in the accompanying  consolidated  balance sheets are
shown net of an  allowance  for  doubtful  accounts  of $2,285  and $2,493 as of
December 31, 1999 and 1998, respectively.


                                      F-11

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------

Income Taxes

         The  Company  operates  and  intends to continue to operate in a manner
which will qualify it as a REIT under the Internal  Revenue  Code. A trust which
distributes at least 95% of its taxable income to its shareholders each year and
which meets  certain other  conditions  will not be taxed on that portion of its
taxable income which is distributed to its shareholders. The following per share
distributions (and their tax classifications) were paid during 1999 (unaudited):

                         Ordinary       Return          Capital        Total
                          Income        of Capital       Gain           Paid
                          ------        ----------       ----           ----

         Preferred         $2.44           -               -            $2.44
         Common            $1.95           -               -            $1.95

         If the Company fails to qualify as a REIT in any tax year,  the Company
will be subject to Federal  income tax  (including  any  applicable  alternative
minimum  tax) on its  taxable  income at regular  corporate  rates.  Even if the
Company  qualifies for taxation as a REIT, the Company may be subject to certain
state and local taxes on its income and property  and federal  income and excise
taxes on its undistributed income.

Earnings per Common Share

         Basic  earnings per Common Share is  calculated  by dividing net income
allocated to Common Stockholders by the weighted average number of common shares
outstanding  during the respective  periods.  Diluted  earnings per common share
reflects the dilutive  effect of  outstanding  employee  stock options using the
treasury stock method and other common stock equivalents. The assumed conversion
of the partnership  units  (4,189,842,  2,787,954 and 1,278,088 common units for
the years ended  December 31,  1999,  1998 and 1997,  respectively,  and 85,760,
429,147 and 427,605  preferred units for the years ended December 31, 1999, 1998
and  1997,  respectively),  held  by  the  limited  partners  of  the  Operating
Partnership  would result in the  elimination of earnings  allocated to minority
interests.  The conversion of the preferred units would be  anti-dilutive  while
the  conversion  of the  common  units  would  have  no  effect  on the  periods
presented. The conversion of Preferred Stock (3,171,626, 2,966,908 and 2,966,908
common share  equivalents for the years ended December 31, 1999, 1998, and 1997,
respectively) and the Exchangeable Debentures (625,219, 1,282,051, and 1,282,051
common share  equivalents  for the years ended December 31, 1999, 1998 and 1997,
respectively) would be anti-dilutive for the periods presented.

Minority Interest

         Minority  interest   represents  the  limited  partners'   interest  of
4,389,979 and 3,707,364 common units in the Operating Partnership as of December
31, 1999 and 1998,  respectively,  and 85,760 and 429,147 Exchangeable Preferred
Units  in  the  Operating   Partnership  as  of  December  31,  1999  and  1998,
respectively.  The  Exchangeable  Preferred Units have an aggregate  liquidation
value of $2,144. At the date of formation, the minority interest was established
based on their interest in the value of the Operating Partnership. Annually, the
income is assigned to Preferred Unitholders to the extent of their distributions
and amounts  necessary to maintain their balance at its liquidation  value.  Any
remaining  income is assigned to Common  Unitholders  based on their  percentage
interest  during the period the  income is  generated.  Losses of the  Operating
Partnership  are  allocated  to  Common  Unitholders  based on their  percentage
interest  to the extent  that they have  capital  available.  Additionally,  the
impact on stockholders'  equity of changes in minority interests'  percentage of
ownership  caused by the issuance of Common Stock in the Company or the issuance
of units in the  Operating  Partnership  are  reflected  in  additional  paid in
capital.


                                      F-12

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------

New Accounting Pronouncements

         On June 16,  1998,  the  Financial  Accounting  Standards  Board issued
Statement  No.  133,   "Accounting   for  Derivative   Instruments  and  Hedging
Activities"  (SFAS 133),  as amended by SFAS 137,  which is effective for fiscal
years  beginning  after  June 15,  2000.  SFAS 133  establishes  accounting  and
reporting  standards for derivative  instruments and hedging  activities.  Under
this  statement  derivatives  are recognized at fair market value and changes in
fair market value are recognized as gains or losses. Management has not assessed
the impact of the adoption of SFAS 133.

         On December 6, 1999, the SEC issued Staff Accounting  Bulletin No. 101,
"Revenue Recognition in Financial  Statements" (SAB 101), which is effective for
all periods after December 31, 1999. SAB 101 establishes that contingent  rental
income  should  accrue  only  when the  changes  in the  factors  on  which  the
contingent  lease payment are based actually  occur.  Management  plans to adopt
this  standard  for all  reporting  periods  subsequent  to December  31,  1999.
Management  has not  assessed  the impact of the  adoption of SAB 101 due to the
variability of the terms under which contingent rentals may occur.

4. RENTAL PROPERTIES

         Depreciation  expense for each of the years ended  December  31,  1999,
1998 and 1997 was $16,152, $13,997 and $10,719, respectively.

         For  each of the  years  ended  December  31,  1999,  1998,  and  1997,
maintenance and repairs expense was $5,248, $4,299 and $3,501, respectively, and
real estate taxes were $8,525, $7,535 and $4,968, respectively. Such amounts are
included in  property  operating  and  maintenance  expense in the  accompanying
consolidated statements of operations.

5. MORTGAGE DEBT

         Mortgage  and other notes  payable  consisted  of the  following  as of
December 31, 1999 and 1998, respectively:

                                                   1999       1998
                                                   ----       ----
Fixed-rate debt with rates ranging from 6.54%
        to 9.83%, payable through 2014 (a) ...   $238,350   $221,406
Borrowings under the Line of Credit ..........     44,000      9,200
Industrial revenue bonds payable June 2010 (b)      6,650      6,870
Other variable rate mortgages
payable 2001 to 2004, at LIBOR + 1.50%
to LIBOR + 2.25% .............................      9,116      6,637
                                                 --------   --------
    Total ....................................   $298,116   $244,113
                                                 ========   ========


     (a)  As part of the loans the  lenders  require  the  Company  to  maintain
          escrow  accounts for real estate  taxes,  insurance  and a replacement
          reserve. These escrows,  totaling $2,181 and $3,034 as of December 31,
          1999 and 1998, respectively, are included in other assets.

                                      F-13

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------

     (b)  The Company  assumed  Bond  Obligations  of $7,600  collateralized  by
          Mayfair  Shopping  Center.  The  Bond  Obligations  bear  interest  at
          variable rates,  plus a letter of credit  enhancement fee of 1.5%. The
          variable rates are determined  weekly at the rate necessary to produce
          a bid in the process of remarketing the Bond Obligations  equal to par
          plus accrued interest,  based on comparable issues in the market.  The
          interest rate, including the 1.5% credit enhancement fee, was 5.43% at
          December  31, 1999.  The Bond  Obligations  have a stated  maturity of
          February 1, 2010,  however,  the letter of credit  supporting the Bond
          Obligations expires on June 24, 2003.

          The Bond  Obligations  contain  affirmative  and  negative  covenants,
          events of default and other provisions as are customarily required for
          such instruments.  The most restrictive  covenants require the Company
          to maintain a maximum  leverage ratio (total  indebtedness  divided by
          net worth) of 2.0,  maintain a debt service coverage ratio (net income
          before  interest and  depreciation  divided by scheduled  debt service
          payments) of at least 1.50 and require the  Operating  Partnership  to
          maintain a net worth of at least  $150,000.  At December  31, 1999 and
          1998, the Company was in compliance with all restrictive covenants.

          Maturities  of the existing  indebtedness  at December 31, 1999 are as
          follows:

                        Principal      Amortization     Balloon
                       Curtailment     of Premiums       Amount       Total
                       -----------     -----------       ------       -----
          2000           $5,410         $ 1,179         $ 16,933     $ 23,522
          2001            5,664           1,031           57,680       64,375
          2002            5,710             901           11,843       18,454
          2003            5,283             608           14,926       20,817
          2004            5,668             471            2,418        8,557
          Thereafter     19,810             891          141,690      162,391
                        -------          ------         --------     --------
                        $47,545          $5,081         $245,490     $298,116
                        =======          ======         ========     ========

          In  anticipation  of the mortgage debt  maturing in 2000,  the Company
          entered  into a forward  interest  rate  swap  contract.  The  Company
          intends to hold such contract until the  expiration  date. The purpose
          of the swap is to mitigate  any exposure to  fluctuations  in interest
          rates  until the  maturity  dates of the  mortgages  when the  Company
          expects  to  refinance  these  loans.  Under  the  terms  of the  swap
          contract,  the  Company  pays a fixed  rate to the other  party to the
          contract  ("Counter Party") while receiving variable payments from the
          Counter Party based on the 30-day LIBOR rate. This  effectively  fixes
          the LIBOR rate for the Company during the period of the swap contract.
          The  following  is a summary  of the  Company's  swap  contract  as of
          December 31, 1999:

          NOTIONAL     DATE OF                         FIXED RATE    FAIR MARKET
          AMOUNT      AGREEMENT   PERIOD OF CONTRACT     PAYABLE        VALUE
          ------      ---------   ------------------     -------        -----
           $24,000      01/98     05/01/00 - 05/02/05    5.85%          $1,028


          At December  31,  1998,  the Company had three swap  contracts  with a
          total notional  amount of $97,500,  an average fixed rate of 6.23% and
          fair market value of $(4,511).  The contract  periods ranged from July
          1, 1999 through May 2, 2005.

                                      F-14

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------

         During 1999,  $88,933 of  indebtedness  matured  including  the $25,000
Exchangeable Debentures.  The Company refinanced this debt primarily through six
separate loans  aggregating  $75,000 with  Metropolitan  Life Insurance  Company
("Met Life") and the  conversion  of the  Exchangeable  Debentures  to 1,000,000
shares of  Preferred  Stock.  The Met Life loans are  non-recourse  and are each
secured by one property.

         Part of  this  transaction  included  the  closing  of the  three  swap
contracts that the Company had in place in anticipation  of this financing.  The
Company paid the Counter Party approximately $3,200 to close the Contracts. This
cost was capitalized and is being amortized over the life of the Met Life loans.
The following is a summary of Met Life loans:

<TABLE>
<CAPTION>

                                                                     Coupon
 Loan Amount      Collateral                     Term (years)     Interest Rate    All-In Rate(1)
 -----------      ----------                     ------------     -------------    --------------
<S>            <C>                               <C>              <C>              <C>

 $10,700       Davis Ford Crossing                    10              6.79%             7.21%
  13,700       First State Plaza                      10              6.79%             7.23%
  11,800       Fox Mill Shopping Center               12              6.84%             7.37%
  10,900       Mallard Creek Shopping Center          10              6.85%             7.35%
   6,700       McHenry Commons                        10              6.85%             7.35%
  21,200       Valley Centre                          12              6.84%             7.21%
 -------                                                              ----              ----
 $75,000                                                              6.83%             7.27%
 =======                                                              ====              ====
</TABLE>

-------
(1)  Includes  the  amortization  of costs to close out the  interest  rate swap
     contracts,  mortgage  loan fees and other  closing  costs  over life of the
     loans using the effective interest rate method.

         The  Company  has a  collateralized  revolving  Line of Credit of up to
$51,000 with Union Bank of Switzerland  ("UBS AG"). This line is  collateralized
by seven  properties  (Kenhorst Plaza,  Shoppes of Graylyn,  Watkins Park Plaza,
Four Mile Fork, Takoma Park,  Centre Ridge Marketplace and Newtown Square).  The
line matures on January 31, 2001 and borrowings under this line bear interest at
the 30-day  LIBOR plus one percent  (1%).  As of December  31,  1999,  there was
$44,000 outstanding under the Line of Credit.

         The Line of  Credit is  available  to fund  acquisitions,  renovations,
expansions and other working capital  requirements.  Definitive  agreements with
respect to the Line of Credit contain customary representations,  warranties and
covenants.

         Interest paid for the years ended December 31, 1999, 1998, and 1997 was
$22,031, $20,595 and $17,437, respectively.

6. DEBENTURES

         On June 27, 1999, the holder of the $25,000, 8.25% Debentures exchanged
the Debentures for 1,000,000 shares of Preferred Stock.

7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

         Accounts payable and accrued expenses  consisted of the following as of
December 31, 1999 and 1998, respectively:

                                      F-15

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------

                                                              1999         1998
                                                              ----         ----
Accrued real estate taxes ............................      $ 3,286      $ 2,780
Deferred acquisition payments ........................        1,434        1,939
Tenant security deposits .............................        2,132        2,170
Accrued compensation payable in Company stock ........        1,534        1,479
Accounts payable and other accrued expenses ..........        3,964        3,174
                                                            -------      -------
Total ................................................      $12,350      $11,542
                                                            =======      =======

8. PREFERRED STOCK

         The  Company's  charter  authorizes  the  issuance of up to  10,000,000
shares of preferred stock,  par value $.01 per share. The Convertible  Preferred
Stock has a  liquidation  preference  equal to $25.00  per share  plus an amount
equal to any accrued and unpaid dividend (the "Convertible Preferred Liquidation
Preference Amount").  Holders of the Convertible Preferred Stock are entitled to
receive  cumulative  preferential  cash  dividends  in an  amount  per  share of
Convertible  Preferred  Stock equal to $0.6094 per quarter plus a  participating
dividend  equal to the  amount,  if any, of  dividends  in excess of $0.4875 per
quarter  with respect to the number of shares of Common Stock into which a share
of  Convertible  Preferred  Stock is then  convertible.  Shares  of  Convertible
Preferred Stock are convertible on or after May 31, 1999 into 1.282051 shares of
Common Stock. The Company may redeem the Convertible  Preferred Stock commencing
July 15, 1999 at a redemption  price of $27.44 per share.  The redemption  price
reduces annually thereafter in stages to $25.00 in 2004.

9. SUMMARY OF NONCASH INVESTING AND FINANCING ACTIVITIES

         Significant noncash transactions for the years ended December 31, 1999,
1998 and 1997 were as follows:

<TABLE>
<CAPTION>

                                                         1999     1998       1997
                                                         ----     ----       ----
<S>                                                    <C>       <C>       <C>
Liabilities assumed in purchase of rental properties   $19,213   $35,521   $74,657
Conversion of Exchangeable Debentures to
   Preferred Stock .................................   $25,000        --        --
Common and Preferred Units in the Operating
   Partnership issued in connection with the
   purchase of rental properties ...................   $ 5,922   $39,674   $33,851
Common Units in the Operating Partnership
  issued to pay deferred consideration liability ...   $   360   $ 1,462        --
Adjustment for minority interest's
   ownership of the Operating Partnership ..........   $ 2,771   $10,981   $10,613
 Exchange of Common Units in the
    Operating Partnership for Common Shares ........   $   871   $ 1,297   $   320
 Exchange of Preferred Units in the
    Operating Partnership for Preferred Shares .....   $    95        --        --
</TABLE>


                                      F-16

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                     -------


10. LEASE AGREEMENTS

         The Company is the lessor of retail properties with initial lease terms
expiring  through  the year 2030.  Many leases are  renewable  for three to five
years at the lessee's option.  Future minimum lease receipts under noncancelable
operating leases as of December 31, 1999 are as follows:

        2000                            $ 68,039
        2001                              61,921
        2002                              53,895
        2003                              44,841
        2004                              36,117
        Thereafter                       172,783
                                         -------
        Total                           $437,596
                                        ========

         These  future  rentals  do not  include  additional  rent  which may be
received from tenants for pass-through provisions in leases related to increases
in operating expenses or for percentage rentals.

11. COMMITMENTS AND CONTINGENCIES

         Legal Proceedings

         The Company is not presently  involved in any material  litigation nor,
to its knowledge,  is any material litigation  threatened against the Company or
its properties,  other than routine litigation arising in the ordinary course of
business  or  which  is  expected  to be  covered  by  the  Company's  liability
insurance.  In the opinion of management of the Company,  such litigation is not
expected to have a material adverse effect on the business,  financial condition
or results of operations of the Company.

         Environmental

         The  Company,  as an  owner  of real  estate,  is  subject  to  various
environmental laws of Federal and local  governments.  Compliance by the Company
with  existing  laws has not had a  material  adverse  effect  on its  financial
condition  and  management  does not  believe it will have such an effect in the
future. However, the Company cannot predict the impact of new or changed laws or
regulations on its current Retail Properties.

         All  of  the  Retail   Properties   have  been  subjected  to  Phase  I
environmental audits. Such audits have not revealed,  nor is management aware of
any  environmental  liability  that  management  believes  would have a material
adverse impact on the consolidated financial position,  results of operations or
liquidity. Management is unaware of any instances in which it would incur and be
financially  responsible  for any  material  environmental  costs  if any or all
Retail Properties were sold, disposed or abandoned.

12. RELATED-PARTY TRANSACTIONS

         The Operating  Partnership owns 100% of the non-voting  Preferred Stock
of First Washington Management, Inc. (FWM), which entitles it to 99% of the cash
flow of FWM. Certain of the officers of the Company own 100% of the Common Stock
of FWM which  entitles  them to 1% of the cash  flow of FWM.  In  addition,  the
Company received $480 annually of interest income,  included in income from FWM,
on the FWM Note in 1999,  1998 and 1997.  The Company's  loss  recognized on the
investment  in FWM for the years  ended  December  31,  1999,  1998 and 1997 was
$1,583,  $398  and  $47,  respectively.  Included  in  other  assets  is  $1,552
representing the investment in FWM.

                                      F-17

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------

         FWM provides property management, leasing and other related services to
the  Company.  Management  and other fees paid by the Company in 1999,  1998 and
1997 amounted to $5,530, $4,546 and $3,687, respectively.

13. STOCK AND STOCK OPTION PLANS

         Stock Option Plans

         Under  various plans and  agreements,  the Company has  authorized  the
issuance of stock and stock  options to certain  officers  and  employees of the
Company.  As permitted  by SFAS 123, the Company  continues to apply APB Opinion
No. 25 and related Interpretations in accounting for its plans.

         The Company  established  a Stock Option Plan (the "Stock Option Plan")
for the Company's  directors,  executive  officers and key employees of FWM. The
Stock  Option Plan  provides  that the  compensation  committee  of the Board of
Directors (or Board,  in the case of options  granted to independent  directors)
may grant or issue stock options.  Each grant or issuance will be set forth in a
separate  agreement  with the person  receiving  the award and will indicate the
type,   terms  and  conditions  of  the  award.   The  plan  provides  for  both
non-qualified  and incentive stock options.  The Stock Option Plan provides that
1,296,691 shares of Common Stock will be reserved for issuance.

         SFAS 123  requires  pro forma  information  regarding  net  income  and
earnings per share as if the Company  accounted  for its stock options under the
fair value  method of that  statement.  The fair value of the options  issued in
1999, 1998 and 1997 are estimated to be $234, $161 and $221, respectively, as of
the  date  of  the   grant,   using  a  binomial   model   with  the   following
weighted-average  assumptions:  risk-free interest rates of 4.8%, 5.5% and 7.4%;
dividend rate of 8.8%, 9.3% and 8.7%;  volatility factors of the expected market
price of the Company's shares of 17.5%,  17.3% and 17.0%; and a weighted average
expected life of the options of 2.3, 3.0 and 3.8 years, respectively.

         Because  option  valuation  models  require input of highly  subjective
assumptions, such as the expected stock price volatility, and because changes in
these  assumptions can materially  affect the fair value estimate,  the existing
model may not necessarily provide a reliable single measure of the fair value of
its stock options.

         For purposes of pro forma disclosures,  the estimated fair value of the
options are amortized to expense over the options' vesting period. The pro forma
net income is as follows:

<TABLE>
<CAPTION>

                                                     1999       1998          1997
                                                     ----       ----          ----
<S>                                              <C>          <C>          <C>
Pro forma net income before extraordinary item   $   11,121   $   9,831    $   2,685
Extraordinary item ...........................           --        (277)        (790)
                                                 ----------   ---------    ---------
Pro forma net income .........................   $   11,121   $   9,554    $   1,895
                                                 ==========   =========    =========
Pro forma earnings per Common Share - Basic
   Income before extraordinary item ..........   $     1.22   $    1.23    $    0.47
   Extraordinary item ........................           --       (0.04)       (0.14)
                                                 ----------   ---------    ---------
   Net income ................................   $     1.22   $    1.19    $    0.33
                                                 ==========   =========    =========
Pro forma earnings per Common Share - Diluted
   Income before extraordinary item ..........   $     1.21   $    1.22    $    0.47
   Extraordinary item ........................           --       (0.04)       (0.14)
                                                 ----------   ---------    ---------
   Net income ................................   $     1.21   $    1.18    $    0.33
                                                 ==========   =========    =========
</TABLE>

                                      F-18

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    ---------

         A summary of the  Company's  stock option  activity for the years ended
December 31 is as follows:

<TABLE>
<CAPTION>

                                                    SHARES AVAILABLE    WEIGHTED          RANGE OF
                                        OPTIONS        FOR FUTURE        AVERAGE          EXERCISE
                                      OUTSTANDING    OPTION GRANTS    EXERCISE PRICE       PRICE
                                      -----------    -------------    --------------       -----
<S>      <C> <C>                       <C>              <C>            <C>               <C>
December 31, 1996 ................     339,648          11,892         $   19.50         $   19.50

Amendment of Stock
Option Plan ......................          --         450,000
Options granted ..................     145,500        (145,500)        $   24.00         $   24.00
Options exercised ................      (2,956)             --         $   19.50         $   19.50
Options expired/forfeited ........        (228)            228         $   19.50         $   19.50
                                       -------        --------

December 31, 1997 ................     481,964         316,620         $   20.86         $19.50-$24.00

Amendment of Stock
Option Plan ......................          --         500,000
Options granted ..................     105,500        (105,500)        $   25.50         $   25.50
Options exercised ................      (2,919)             --         $   19.50         $   19.50
Options expired/forfeited ........      (8,228)          8,228         $   23.69         $19.50-$25.50
                                       -------        --------
December 31, 1998 ................     576,317         719,348         $   21.67         $19.50-$25.50
Options granted ..................     216,500        (216,500)        $   20.90         $20.75-$22.56
Options exercised ................      (3,184)             --         $   19.50                $19.50
Options expired/forfeited ........     (21,000)         21,000         $   22.45         $19.50-$25.50
                                       -------        --------
December 31, 1999 ................     768,633         523,848         $   21.43         $19.50-$25.50
                                       =======        ========
</TABLE>


         At December 31, 1999, 1998 and 1997 options for 454,133 shares, 379,150
shares and 334,131 shares, respectively, were exercisable. The average remaining
contractual life of options outstanding at December 31, 1999, 1998 and 1997 were
7.1 years,  7.2 years and 7.9 years,  respectively.  The weighted  average grant
date fair value per options granted in 1999, 1998 and 1997 was $1.08,  $1.53 and
$1.52, respectively.


         Contingent and Restricted Stock Plans

         Two of the  Company's  senior  officers  have entered  into  employment
agreements. The agreements call for a base salary plus an incentive compensation
arrangement based on the Company meeting certain operating results requirements.
The incentive  compensation is in the form of common stock grants. Up to 100,000
shares of stock may be issued to each of the two officers (or their  designees).
These additional shares of stock will be recorded as additional  compensation in
the period  earned.  In 1997,  47,380 shares were issued to each of the officers
with a total value of $2,300. Total compensation cost recognized under this plan
was $1,100, for the year ended December 31, 1997.


                                      F-19

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    --------


         The Company  approved a  Contingent  Stock  Agreement  and a Restricted
Stock Plan for each of these  officers.  The Contingent  Stock  Agreements  have
reserved for grant 60,000  shares of common stock  (30,000  shares each) for the
period July 1, 1997 through  December 31, 1999. The agreements are  administered
by the Compensation Committee of the Board of Directors ( the "Committee").  The
grants are awarded if the Committee  determines  that the Company has materially
met certain  targeted  performance  criteria.  During 1999 and 1998,  12,500 and
5,000  shares,  respectively,  were  issued  to each of the  two  officers.  The
weighted  average  fair  value of the  shares  was $536 and $270,  respectively.
12,500  shares  are  available  to be  issued  in March  2000 to each of the two
officers.  The two officers were issued 39,200 shares of common stock each under
the  Restricted  Stock  Plan,  which is also  administered  by the  Compensation
Committee.  The shares issued under this plan are subject to a vesting  schedule
as follows:

      Vesting Date                               Number of Shares Vested
      ------------                               -----------------------
     July 1, 1997                                          5,000
     March 31, 1998                                       11,400
     March 31, 1999                                       11,400
     March 31, 2000                                       11,400
                                                          ------
         TOTAL                                            39,200
                                                          ======

         The Company will record  compensation  expense as the shares vest based
on the fair market  value of the stock as of the date of issuance  (i.e.  $24.25
per share).

         In addition to the above restricted shares, during 1998 each of the two
officers elected to receive 4,750 restricted shares in lieu of their cash bonus.
Such restricted shares are subject to a 3-year vesting period.

         In May 1998,  the Board  amended the  employment  agreements of the two
senior  officers  effective  March 1998. The terms of the employment  agreements
were  extended to June 30, 2002 and December 31,  2002.  The amended  employment
agreements  continue to provide for a base  salary plus annual  incentive  bonus
arrangement,  payable in cash,  based on the Company  meeting  certain  targeted
performance criteria to be established by the committee.  The amended employment
agreements  further  provide  for a grant to each  officer of 150,000  shares of
additional  Restricted  Stock on  January 1, 2000.  The  shares  issued  will be
subject to vesting as follows:  25,000 shares on January 1, 2001;  50,000 shares
on January 1, 2002, and 75,000 shares on January 1, 2003. The amended employment
agreements also provide for the issuance to each officer of an additional 25,000
shares of Contingent  Stock on each of March 31, 2001,  2002 and 2003,  based on
the Company's  attainment  during the preceding  fiscal year of certain targeted
performance criteria to be established by the Committee.

         A total of  478,400  shares of  common  stock  are  reserved  under the
Restricted  Stock Plan for grants to officers and  employees of the Company,  of
which 117,542 were issued as of December 31, 1999.


                                      F-20

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    --------

14.      CONDENSED QUARTERLY FINANCIAL INFORMATION (UNAUDITED)

<TABLE>
<CAPTION>

1999                                         First         Second       Third       Fourth
----                                         -----         ------       -----       ------
<S>                                       <C>           <C>          <C>          <C>
Total revenues ........................   $   21,125    $   21,440   $   21,622   $   23,341
Income before minority interest,
  extraordinary item, and distributions
  to Preferred Stockholders ...........   $    5,173    $    5,311   $    6,346   $   6,333
Net income  allocated
  to Common Stockholders ..............   $    2,457    $    2,626   $    3,176   $   3,067
Earnings per Common Share-Basic .......   $     0.29    $     0.30   $     0.34   $    0.32
Earnings per Common Share-Diluted .....   $     0.28    $     0.30   $     0.33   $    0.32


1999                                         First         Second       Third       Fourth
----                                         -----         ------       -----       ------
Total revenues ........................   $   16,640    $   18,112   $   18,563   $   20,749
Income before minority interest,
  extraordinary item, and distributions
  to Preferred Stockholders ...........   $    5,507    $    3,940   $    5,151   $    5,603
Extraordinary item ....................   $     (277)           --           --           --
Net income allocated
  to Common Stockholders ..............   $    2,673    $    1,643   $    2,625   $    2,740
Earnings per Common Share-Basic
  Income before extraordinary item ....   $     0.40    $     0.22   $     0.31   $     0.32
   Extraordinary item .................        (0.04)           --           --           --
                                          ----------    ----------   ----------   ----------
  Net Income ..........................   $     0.36    $     0.22   $     0.31   $     0.32
                                          ==========    ==========   ==========   ==========
Earnings per Common Share - Diluted
  Income before extraordinary item ....   $     0.40    $     0.22   $     0.31   $     0.32
  Extraordinary item ..................        (0.04)           --           --           --
                                          ----------    ----------   ----------   ----------
  Net income ..........................   $     0.36    $     0.22   $     0.31   $     0.32
                                          ==========    ==========   ==========   ==========
</TABLE>


                                      F-21

<PAGE>

              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                     ------


15. FAIR VALUE OF FINANCIAL INSTRUMENTS

         The following  methods and  assumptions  were used to estimate the fair
values of the Company's financial instruments:

         Cash and Equivalents: The carrying amount approximates fair value.

         Mortgage notes payable and  Debentures:  The fair values were estimated
by  discounting  the future cash flows using the current rates for similar types
of borrowing arrangements.

         Interest  Rate Swaps and Caps:  The fair value of these  contracts  was
estimated  based  upon the  amount  the  Company  would  have  received/paid  to
terminate the swaps and caps.

         The estimated  fair values of the Company's  financial  instruments  at
December 31 are as follows:


                                           1999                    1998
                                  ---------------------   ----------------------
                                   CARRYING     FAIR       CARRYING      FAIR
    Financial Assets:                VALUE      VALUE        VALUE      VALUE
    -----------------                -----      -----        -----      -----
Cash and Cash Equivalents .....   $   4,332   $   4,322   $   3,163   $   3,163
Financial Liabilities:
Mortgage notes payable ........   $ 298,116   $ 282,350   $ 244,113   $ 275,499
Debentures ....................          --          --   $  25,000   $  30,369
Off-Balance Sheet Instruments
Interest Rate Swaps and Caps
 receive/(pay) ................          --   $   1,028          --   $  (4,523)


16. BUSINESS SEGMENTS

         The Company owns one  property  type only (i.e.  neighborhood  shopping
centers).  Resource  allocation,  determination  of  compensation  and financial
analysis are performed by the Company's management for each segment. The Company
measures  performance  of the segments  based on total  revenues  less  property
operating and maintenance expenses, as detailed in the following table:


                                      Retail
                                     Properties   FWM, Inc.  Other(1)    Total
                                     ----------   ---------  --------    -----
Year ended December 31,
 1999:
Revenues .........................   $ 86,209   $   6,357   $ (5,038)   $ 87,528
Operating and maintenance
 expenses ........................     20,140       7,460     (7,460)     20,140
                                     --------   ---------   --------    --------
Income from operations ...........   $ 66,069   $  (1,103)  $  2,422    $ 67,388
                                     ========   =========   ========    ========
Commercial real estate
 property expenditures ...........   $ 68,977   $      --   $     --    $ 68,977
                                     ========   =========   ========    ========
Segment assets at December
 31, 1999 ........................   $583,293   $      --   $     --    $583,293
                                     ========   =========   ========    ========


                                      F-22

<PAGE>


              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)
                                    --------


Year ended December 31,
 1998:
Revenues ..........................   $ 72,942   $  6,487   $ (5,365)   $ 74,064
Operating and maintenance
 expenses .........................     17,934      6,405     (6,405)     17,934
                                      --------   --------   --------    --------
Income from operations ............   $ 55,008   $     82   $  1,040    $ 56,130
                                      ========   ========   ========    ========
Commercial real estate
 property expenditures ............   $110,646   $     --   $     --    $110,646
                                      ========   ========   ========    ========
Segment assets at December
 31, 1998 .........................   $532,954   $     --   $     --    $532,954
                                      ========   ========   ========    ========

Year ended December 31, 1997:
Revenues ..........................   $ 54,297   $  5,902   $ (4,565)   $ 55,634
Operating and maintenance
 expenses .........................     13,522      5,469     (5,469)     13,522
                                      --------   --------   --------    --------
Income from operations ............   $ 40,775   $    433   $    904    $ 42,112
                                      ========   ========   ========    ========
Commercial real estate
 property expenditures ............   $144,411   $     --   $     --    $144,411
                                      ========   ========   ========    ========
Segment assets at December 31,
 1997..............................   $439,141   $     --   $     --    $439,141
                                      ========   ========   ========    ========
----------

(1)  Represents the adjustment for  straight-lining  of rents and reflecting the
     net income from FWM using the equity method of accounting.

         The following  table  reconciles  income from operations for reportable
segments to income before  extraordinary  items as reported in the  Consolidated
Statements of Operations.


                                                  Years ended December 31
                                           -------------------------------------
                                              1999         1998           1997
                                              ----         ----           ----
Income from operations for
 reportable segments .................     $ 67,388      $ 56,130      $ 42,112
General and administrative
 expenses ............................       (4,161)       (3,789)       (3,363)
Interest expense .....................      (21,481)      (19,966)      (18,416)
Depreciation and amortization ........      (16,985)      (14,627)      (11,172)
Income allocated to minority
 interest ............................       (5,717)       (4,602)       (1,743)
Distributions to Preferred
 Stockholders ........................       (6,120)       (5,641)       (5,641)
Income from Management Company .......       (1,103)           82           433
Gain (loss) on sale of
 properties ..........................         (495)        2,371           549
                                           --------      --------      --------
Income before extraordinary
 item ................................     $ 11,326      $  9,958      $  2,759
                                           ========      ========      ========




                                      F-23

<PAGE>




              FIRST WASHINGTON REALTY TRUST, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

17. SUBSEQUENT EVENTS

         On January 7, 2000, the Company placed  separate  mortgages on Whitnall
Square,  Cudahy Center and Racine  Centre.  The mortgages  bear interest at 7.8%
annually,  are due in 10 years  and have  monthly  payments  based on a  30-year
amortization  schedule. The loan proceeds were $12,325 and were used to pay down
the line of credit.

         On January 14, 2000, the Board of Directors  declared a distribution of
$0.4875 and $0.6094 per Common and Preferred  share of stock,  respectively,  to
shareholders   of  record  as  of  February  1,  2000.  On  February  15,  2000,
distributions in the amount of $8,433 were paid.

         On March 10, 2000, the Board of Directors awarded 12,500 shares to each
of two of the Company's  senior officers as provided for under their  employment
agreements.  The shares have a fair  market  value of  approximately  $481 as of
March 10, 2000.



                                      F-24

<PAGE>



                       FIRST WASHINGTON REALTY TRUST, INC.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
              FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                                     -------

<TABLE>
<CAPTION>

                                          Balance at       Additions          Deduction
                                           Beginning      Charged to Bad       Amounts       Balance at
     Description                          of Year          Debt Expense     Written Off      End of Year
     -----------                          ----------      --------------    -----------      -----------
     Allowance for
     Doubtful Accounts:

<S>                                        <C>                <C>             <C>            <C>
     Year Ended December 31, 1999           $2,493             $521            $(729)         $2,285
                                            ======             ====            ======         ======
     Year Ended December 31, 1998           $1,453           $1,993            $(953)         $2,493
                                            ======           ======            ======         ======
     Year Ended December 31, 1997             $683           $1,285            $(515)         $1,453
                                              ====           ======            ======         ======
</TABLE>











                                      F-25

<PAGE>


       SCHEDULE III - REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1999

                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                     Initial Cost           Capitalized
                                                                                ----------------------     Subsequent to
                                                                                            Building &      Acquisition-
Property                                      Location          Encumbrance       Land     Improvements     Improvements      Land
--------                                      --------          -----------       ----     ------------     ------------      ----
Retail:
<S>                                        <C>                  <C>          <C>          <C>             <C>           <C>
Allen Street Shopping Center (1)            Allentown, PA          $ 5,714      $   867      $ 3,271         $   206       $   867
Ashburn Farm Village Center                 Ashburn, VA              6,537        2,373        7,494             (86)        2,263
Bowie Plaza                                 Bowie, MD                4,703        2,256        9,933             502         2,438
Brafferton Center                           Garrisonville, VA           --        1,595        6,385             491         1,595
Bryans Road Shopping Center                 Bryans Road ,MD             --        1,214        3,314           4,201         1,230
Capital Corner Shopping Center              Landover, MD                --          966            0           3,516           989
Centre Ridge Marketplace (2)                Centreville, VA         44,000        4,847        3,807           2,228         5,108
Chesapeake Bagel Building                   Alexandria, VA             735          191          804             673           192
City Avenue Shopping Center                 Philadelphia, PA         9,581        3,135       12,540           2,295         3,260
Clinton Square Shopping Center              Clinton, MD                 --          242        1,437            (117)          251
Clopper's Mill Village Shopping Center      Germantown, MD          13,627        4,011       16,006             206         4,011
Connecticut Avenue Shops                    Washington, DC              --           91          932             153            95
Colonial Square Shoppipng Center            York, PA                    --          639        1,678             269           646
Cudahy Center (5)                           Cudahy, WI                  --          561        2,243               0           561
Davis Ford Crossing                         Manassas, VA            10,617        2,574       10,092             304         2,543
Elkridge Corners Shopping Center            Elkridge, MD             6,322        1,625        7,237              30         1,772
Festival at Woodholme                       Baltimore, MD           11,238        2,915       11,660             465         2,915
Firstfield Shopping Center                  Gaithersburg, MD         2,416          699        2,797             242           699
First State Plaza                           New Castle, DE          13,594        2,575       10,358             815         2,575
Four Mile Fork Shopping Center (2)          Fredericksburg, VA          --        1,196        4,783             195         1,196
Fox Mill Shopping Center                    Reston, VA              11,724        2,752       11,019             482         2,752
Georgetown Shops (3)                        Washington ,D.C.            --          949        3,174          (2,135)          515
Glen Lea Shopping Center (4)                Richmond, VA            12,627          757        3,027             207           757
Hanover Village Shopping Center (4)         Mechanicsville, VA          --        1,081        4,323             238         1,081
James Island Shopping Center                Charleston, SC              --        1,321        2,758             495         1,324
Kamp Washington Shopping Center             Fairfax, VA              2,979        3,039       12,145             117         3,039
Kenhorst Plaza Shopping Center (2)          Reading, PA                 --        2,253        9,013           1,699         2,253
Kings Park Shopping Center                  Burke, VA                4,458        1,153        4,613             623         1,153
Laburnum Park Shopping Center (4)           Richmond, VA                --        1,194        4,774            (320)        1,148
Laburnum Square Shopping Center (4)         Richmond, VA                --        1,104        4,418           1,107         1,105
McHenry Commons                             McHenry, IL              6,640        1,669        6,676             155         1,669
Mallard Creek Shopping Center               Round Lake Beach, IL    10,802        2,674       10,695             444         2,674
Mayfair Shopping Center                     Philadelphia, PA         6,650        2,463        9,860             376         2,463
Mitchellville Plaza                         Mitchellville, MD       14,249        4,279       17,114             167         3,877
Newark Shopping Center                      Newark, DE               9,337        2,429        9,716              13         2,429
Newtown Square Shopping Center (2)          Newtown Square, PA          --        2,508       10,031           1,399         2,508
Northway Shopping Center                    Millersville, MD         6,043        1,838        7,400             621         1,838

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                      Gross amounts
                                        at which
                                     carried at the
                                    close of period
                                       Building &              Accumulated       Date of          Date
                                      Improvements    Total    Depreciation     Construction     Acquired
                                      ------------    -----    ------------     ------------     --------
Retail:
<S>                                      <C>         <C>         <C>               <C>            <C>
Allen Street Shopping Center (1)         $ 3,477     $ 4,344     $   455           1958           1996
Ashburn Farm Village Center                7,518       9,781         676           1996           1997
Bowie Plaza                               10,253      12,691         658           1966           1998
Brafferton Center                          6,876       8,471       1,254           1974           1994
Bryans Road Shopping Center                7,499       8,729       2,322           1972           1990
Capital Corner Shopping Center             3,493       4,482       1,631           1987           1986
Centre Ridge Marketplace (2)               5,774      10,882         659           1996           1996
Chesapeake Bagel Building                  1,476       1,668         751           1800           1983
City Avenue Shopping Center               14,710      17,970       1,351       1950's-60's        1997
Clinton Square Shopping Center             1,311       1,562         804           1979           1984
Clopper's Mill Village Shopping Center    16,212      20,223       1,964           1995           1996
Connecticut Avenue Shops                   1,081       1,176         456           1954           1986
Colonial Square Shoppipng Center           1,940       2,586         622           1955           1990
Cudahy Center (5)                          2,243       2,804           5           1972           1999
Davis Ford Crossing                       10,427      12,970       1,859           1988           1994
Elkridge Corners Shopping Center           7,120       8,892         362           1990           1998
Festival at Woodholme                     12,125      15,040       1,806           1986           1995
Firstfield Shopping Center                 3,039       3,738         409           1978           1995
First State Plaza                         11,173      13,748       2,146           1988           1994
Four Mile Fork Shopping Center (2)         4,978       6,174         500           1975           1997
Fox Mill Shopping Center                  11,501      14,253       2,039           1988           1994
Georgetown Shops (3)                       1,473       1,988         650       Late 1800's      1981-1989
Glen Lea Shopping Center (4)               3,234       3,991         483           1969           1995
Hanover Village Shopping Center (4)        4,561       5,642         656           1971           1995
James Island Shopping Center               3,250       4,574       1,020           1967           1990
Kamp Washington Shopping Center           12,262      15,301         403           1960           1999
Kenhorst Plaza Shopping Center (2)        10,712      12,965       1,540           1990           1995
Kings Park Shopping Center                 5,236       6,389         509           1966           1996
Laburnum Park Shopping Center (4)          4,500       5,648         663           1988           1995
Laburnum Square Shopping Center (4)        5,524       6,629         854           1975           1995
McHenry Commons                            6,831       8,500         522           1988           1997
Mallard Creek Shopping Center             11,139      13,813         836           1987           1997
Mayfair Shopping Center                   10,236      12,699       1,867           1988           1994
Mitchellville Plaza                       17,683      21,560       1,285           1991           1997
Newark Shopping Center                     9,729      12,158         102        1950's/87         1999
Newtown Square Shopping Center (2)        11,430      13,938       1,025       1960's-70's        1996
Northway Shopping Center                   8,021       9,859         780           1987           1996
</TABLE>

                                      F-26

<PAGE>


       SCHEDULE III - REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1999

                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                     Initial Cost           Capitalized
                                                                                ----------------------     Subsequent to
                                                                                            Building &      Acquisition-
Property                                  Location              Encumbrance       Land     Improvements     Improvements      Land
--------                                  --------              -----------       ----     ------------     ------------      ----
<S>                                       <C>                     <C>            <C>          <C>                <C>         <C>
Parkville Shopping Center                 Baltimore, MD            3,409          1,678        6,710              150         1,678
Penn Station Shopping Center              District Heights, MD        --          4,275            0           21,429         4,285
Prince George's County Commercial Park    Beltsville, MD              --          1,309          972            5,523         1,342
Potomac Plaza                             Woodbridge, VA           2,579            795        4,235            1,200           733
Racine Centre (5)                         Racine, WI                  --          1,613        6,451                0         1,613
Riverside Square / River's Edge           Chicago, IL                 --          2,772       11,086              760         2,777
Rosecroft Shopping Center                 Temple Hills, MD            --            664        2,723            2,599           688
Saratoga Shopping Center                  Springfiled, VA          6,776          1,964        7,854                1         1,964
Shoppes of Graylyn (2)                    Wilmington, DE              --          1,478        5,912              129         1,478
Shoppes of Kildaire                       Cary, NC                 7,358          2,202        8,833            2,240         2,208
Southside Marketplace                     Baltimore, MD            7,848          2,209        8,835              418         2,209
Spring Valley Shopping Center             Washington, DC              --          1,175        4,698              221         1,175
Stefko Boulevard Shopping Center (1)      Bethlehem, PA               --          1,149        4,336            1,140         1,149
Stonebrook Plaza                          Merrionette Park, IL     5,770          1,657        6,626              370         1,657
Takoma Park Shopping Center (2)           Takoma Park                 --            957        3,829            1,227           957
The Oaks Shopping Center                  Des Plaines, IL          9,242          2,892       11,570              617         2,888
Town Center at Sterling                   Sterling, VA             8,847          4,414       17,657              446         4,432
Valley Centre                             Owings Mills, MD        21,562          4,718       18,938            2,084         5,551
The Village Shopping Center               Richmond, VA                --          2,660       10,645               19         2,660
Watkins Park Plaza (2)                    Mitchellville, MD           --          2,932       11,730               78         2,932
Westmont Plaza Shopping Center            Haddon township, NJ         --            331        1,325                0           331
Whitnall Square (5)                       St. Francis, WI             --          1,558        6,233                0         1,558
Willston Centre I                         Falls Church, VA            --          2,076        8,306              297         2,087
Willston Centre II                        Falls Church, VA        10,132          2,667       10,672              273         2,700
Woodmoor Shopping Center                  Silver Spring, MD           --          1,123        4,493                0         1,122
                                                                  ------          -----        -----            -----         -----
                                                                $298,116       $119,303     $432,196          $63,497      $119,965
                                                                ========       ========     ========          =======      ========
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
                                      Gross amounts
                                        at which
                                     carried at the
                                    close of period
                                       Building &              Accumulated       Date of          Date
                                      Improvements    Total    Depreciation     Construction     Acquired
                                      ------------    -----    ------------     ------------     --------
<S>                                      <C>         <C>         <C>               <C>            <C>
Parkville Shopping Center                 6,860        8,538          409           1961           1998
Penn Station Shopping Center             21,419       25,704        7,266           1989           1986
Prince George's County Commercial Park    6,462        7,804        2,826           1985           1985
Potomac Plaza                             5,497        6,230        2,132           1963           1985
Racine Centre (5)                         6,451        8,064           13           1988           1999
Riverside Square / River's Edge          11,841       14,618          910           1986           1997
Rosecroft Shopping Center                 5,298        5,986        2,255           1963           1985
Saratoga Shopping Center                  7,855        9,819           33           1977           1999
Shoppes of Graylyn (2)                    6,041        7,519          599           1971           1997
Shoppes of Kildaire                      11,067       13,275        4,411           1986           1986
Southside Marketplace                     9,253       11,462        1,077           1990           1996
Spring Valley Shopping Center             4,919        6,094          323           1930           1997
Stefko Boulevard Shopping Center (1)      5,476        6,625          755           1823           1996
Stonebrook Plaza                          6,996        8,653          546           1984           1997
Takoma Park Shopping Center (2)           5,056        6,013          608           1960           1996
The Oaks Shopping Center                 12,191       15,079          960           1983           1997
Town Center at Sterling                  18,085       22,517          673        1973-1978         1998
Valley Centre                            20,189       25,740        3,430           1987           1994
The Village Shopping Center              10,664       13,324          539           1948           1998
Watkins Park Plaza (2)                   11,808       14,740          668           1985           1998
Westmont Plaza Shopping Center            1,325        1,656            3           1959           1999
Whitnall Square (5)                       6,233        7,791           13           1989           1999
Willston Centre I                         8,592       10,679          296           1952           1998
Willston Centre II                       10,912       13,612          342           1986           1998
Woodmoor Shopping Center                  4,494        5,616           18           1954           1999
                                        -------       ------        -----
                                       $495,031     $614,996      $67,029
                                       ========     ========      =======
</TABLE>
------------
(1)  These properties are encumbered by first deeds of trust as collateral for a
     $5,714 mortgage loan.
(2)  These properties serve as collateral for the Line of Credit facility.
(3)  Consists  of two  locations  in the  shopping  district  of  Georgetown  in
     Washington, DC. Three properties were sold in 1998.
(4)  These properties are encumbered by first deeds of trust as collateral for a
     $12,627 mortgage loan.
(5)  These  properties were  subsequently  encumbered by first deeds of trust in
     January 2000.
(6)  The retail properties have depreciable lives of 31.5 to 40.0 years.

                                      F-27

<PAGE>


       SCHEDULE III - REAL ESTATE INVESTMENTS AND ACCUMULATED DEPRECIATION
                                December 31, 1999
                             (dollars in thousands)
                                   (Continued)


<TABLE>
<CAPTION>



                                               Property Acquistions /   Additions /
                             Balance at       Charges to Depreciation   Improvements    Cost of Real         Balance at
Property                  Beginning of Year         Expense             to Properties   Estate Sold       Beginning of Year
--------                  -----------------         -------             -------------   -----------       -----------------
<S>                           <C>                  <C>                     <C>           <C>                 <C>
Rental Properties             $ 556,146            $ 63,078                $ 5,887       $ (10,115)          $ 614,996
                              =========            ========                =======       =========           =========

Accumulated Depreciation       $ 51,475            $ 16,152                $    --          $ (598)          $  67,029
                               ========            ========                =======       =========           =========
</TABLE>




                                      F-28