SECURITIES AND EXCHANGE
COMMISSION
 Washington, D.C.  20549 FORM 10–KSB (X)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2000 OR (  ) TRANSITION REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE 
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM 
_____________ TO _____________  Commission File Number: 0-25074 STONEHAVEN REALTY TRUST
(Exact name of registrant as specified in its charter) Maryland
  39–6594066(State or other jurisdiction of
  incorporation or organization)
  (I.R.S. Employer Identification Number)
  4150 Olson Memorial
  Highway, Suite 400, Minneapolis, Minnesota
  55422(Address of principal executive
  offices)
  (Zip code)
 763-398-1100(Registrants Telephone Number, including Area Code) Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to
Section 12(g) of the Act:  Common
Shares, $.01 par value Indicate
by check mark whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to the filing
requirements for the past 90 days.  YesX   No ___ Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S–B 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–KSB or any
amendment to this Form 10–KSB. (    ) Registrants
revenues for its most recent fiscal year: $8,116,064 As
of March 1, 2001, the Registrant had 4,517,524 Common Shares, $0.01 par value
and 663,291 Class A Cumulative Convertible Preferred Shares outstanding.  The aggregate market value of the voting
stock held by non-affiliates of the Registrant was approximately $7,019,286
based on the closing prices of $1.7656 for its Common Shares and $6.75 for its
Class A Cumulative Convertible Preferred Shares on the American Stock Exchange
on March 1, 2001. DOCUMENTS
INCORPORATED BY REFERENCE

None

Transitional
Small Business Disclosure Format (Check one): Yes _; No X (Added by  Exch Act Rel No. 31905, eff 4/26/93.)

STONEHAVEN REALTY
TRUST
2000 ANNUAL REPORT ON FORM 10–KSB
TABLE OF CONTENTS

PART IItem 1
  Description of BusinessItem
  2
  Description of PropertyItem
  3
  Legal ProceedingsItem 4
  Submission of Matters to a Vote of Security
  HoldersPART IIItem 5
  Market for Common Equity and Related
  Shareholder MattersItem 6
  Management's Discussion and Analysis or
  Plan of OperationItem
  7
  Financial StatementsItem 8
  Changes In and Disagreements with
  Accountants on
     Accounting and Financial DisclosurePART IIIItem 9
  Trustees, Executive Officers, Promoters and
  Control Persons, 
     Compliance with Section 16(a) of the Exchange ActItem
  10
  Executive CompensationItem 11
  Security Ownership of Certain Beneficial
  Owners and ManagementItem 12
  Certain Relationships and Related
  TransactionsItem 13
  Exhibits and Reports on Form 8-KSIGNATURESPART I

Item 1.  
BUSINESS

RISK FACTORS

This
report on Form 10-KSB contains 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. Forward–looking
statements that are based on certain assumptions, and describe future plans,
strategies and expectations of the Company, are generally identifiable by use
of the words "believe", "expect", "intend",
"anticipate", "estimate", "project" or similar
expressions.   These statements are not
guarantees of future performance, events or results and involve potential risks
and uncertainties.  Accordingly, actual
performance, events or results may differ materially from such forward-looking
statements.  Management undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.

Factors that could cause actual results to
differ materially from current expectations include, but are not limited to,
changes in general economic conditions, changes in interest rates, legislative
and regulatory changes, changes in monetary and fiscal policies of the U.S.
government, including policies of the U.S. Treasury and the Federal Reserve
Board, changes in local real estate conditions (including rental rates and
competing properties), changes in industries in which the Company's principal
tenants compete, the failure to timely lease unoccupied space, the failure to
timely re-lease occupied space upon expiration of leases, the inability to
generate sufficient revenues to meet debt service payments and operating
expenses, the unavailability of equity and debt financing, unanticipated costs
associated with the Company's acquisitions, potential liability under
environmental or other laws and regulations, expanding a new line of business,
customer demand for online services and products, uncertainty of emerging
online services, ability to meet competition, loss of existing key personnel,
ability to hire and retain future personnel, the failure of the Company to
manage its growth effectivelyand other risks identified in this filing
or other reports of the Company filed with the Securities and Exchange
Commission.  These risks and
uncertainties should be considered in evaluating forward–looking
statements and undue reliance should not be placed on such statements. Further
information concerning the Company and its business, including additional
factors that could materially affect the Company's financial results, is
included in other Company filings with the Securities and Exchange Commission.

COMPANY OVERVIEW

Stonehaven Realty
Trust("Company") is
a real estate and technology company separated into two business segments: a
commercial real estate segment which acquires, owns and operates commercial
real estate and a technology segment which provides information technology
consulting and document management solutions.

The
Company is a self-administered real estate investment trust (REIT) formed on
March 15, 1994 under Maryland law.  In
November 1998, the Company became an umbrella partnership REIT and formed an
operating partnership, Wellington Properties Investments, L.P. (Operating
Partnership), of which the Company is the sole general partner and owns an
approximate 92.9% interest.  Through the
Operating Partnership and certain wholly owned subsidiaries, the Company
acquires, owns and operates commercial real estate investment properties.

As of December 31, 2000, the Company owned the following
five commercial real estate properties:

·
  A 26,186 square-foot light industrial
  facility in Plymouth, Minnesota,·
  A 26,186 square-foot light industrial
  facility in Plymouth, Minnesota,·
  A 26,186 square-foot light industrial
  facility in Plymouth, Minnesota,·
  A 77,533 square-foot office building in St.
  Cloud, Minnesota, and·
  A 50,291 square-foot light industrial
  facility in Burnsville, MinnesotaAs of December 31, 2000, management believes
that the Company is organized and operates in a manner that satisfies the
requirements to be treated as a REIT under Maryland law.  However, for the year ended December 31,
2000, management believes it no longer satisfies the requirements for taxation
as a REIT under the Internal Revenue Code of 1986.  For the year ended
December 31, 2000, the Company was in a taxable loss position.  As a result, management of the Company does
not expect the Company will incur a material federal income tax liability for
the year ended December 31, 2000.

On
February 24, 2000, the Company acquired RESoft, Inc., (formerly, NETLink
International, Inc.) (RESoft) a privately held Minnesota corporation.  Since 1991, RESoft has offered various
information technology services and has been a reseller of various computer
hardware and software products. 
Subsequent to the acquisition, RESoft has continued to provide similar
service offerings and in addition, has introduced a proprietary document
management software product primarily targeted to the real estate industry.

Significant
Subsequent Development

On
January 8, 2001, the Company entered into an agreement through the Operating
Partnership to transfer and sell to an unrelated third party the St. Cloud,
Minnesota commercial real estate property. 
In exchange for the commercial real estate property, the Company will
receive approximately $8.3 million.  In
addition, the Company will repay the outstanding mortgage indebtedness of
approximately $7.3 million.

Significant 2000
Developments

On
December 29, 2000, the Operating Partnership sold its membership interest in
its wholly owned subsidiary WPT I, LLC, a Delaware limited liability company
("WPT I") and owner of the Thresher Square property ("Thresher
Property"), to four individuals ("Buyers"), in exchange for
$169,874 in cash, 522,416 shares of common stock of the Company and 61,898
units of WPT I, all of which will be cancelled, and the release of
approximately $6.6 million of debt. In connection with the sale, cash in the
amount of $805,000 securing a letter of credit granted by the Company in favor
of the mortgagee of the Thresher Property and the letter of credit will be
released. Additionally, the Company is released from its obligation to
indemnify one of the Buyers, who is also a member of the Board of Trustees of
the Company, from amounts incurred by him under personal guaranties related to
the Thresher Property which remained in place after the original purchase by
WPT I.  WPT I originally purchased the
Thresher Property from the Buyers, one of which is a Trustee of the Company.

On June 30, 2000, the Company transferred and sold
to Wellington Management Corporation ("WMC") the Company's 100%
interest in Lake Pointe Apartment Homes, Inc., a Wisconsin corporation and wholly–owned subsidiary of the
Company ("Lake Pointe") and the Company's 8% equity interest in
Highlander Acquisition Company, LLC, a Wisconsin limited liability company
("Highlander"). The interests were exchanged for 95,000 shares of the
Company's Class B Junior Cumulative Convertible Preferred Shares owned by
WMC and WMC assumed the mortgage debt totaling approximately $2.7 million
associated with Lake Pointe. In connection with the dispositions, (a) the listing
agreement between the Company and WMC's affiliate, WMC Realty, Inc.
("WRI") was terminated and no brokerage commission was paid to WRI;
(b) the Chairman of the Board of Trustees of the Company resigned
effective June 30, 2000; and (c) a President, who was also the Secretary,
of the Company entered into a Separation Agreement with the Company effective
June 30, 2000.

On
February 29, 2000, the Company through the Operating Partnership acquired
three commercial real estate properties located in suburban Minneapolis, Minnesota
("Plymouth Properties"). The Plymouth Properties were purchased from
a related party for an aggregate purchase price of approximately $6.7 million.
The purchase price was funded through the issuance of an aggregate of 181,629
limited partnership units ("Plymouth Units") in the Operating
Partnership (valued at $4.35 per Plymouth Unit, or an aggregate value of
approximately $790,000), the assumption of certain third–party debt
totaling approximately $4.5 million, secured by the Plymouth Properties, and
the balance paid in cash.

On February 24, 2000, the Company
acquired RESoft.  The acquisition was
accomplished by exchanging 914,292 of the Company's Common Shares for all of
the issued and outstanding stock of RESoft valued at $4.375 per share, or an aggregate
value of approximately $4.0 million.

On
February 18, 2000, the Board of Trustees approved the conversion of 1,657,437
units of the Operating Partnership into
1,468,484 Common Shares and further approved the conversion of the 254,800
Class B Preferred Shares held by American Real Estate Equities, LLC (AREE)
into 808,482 Common Shares.

Significant 1999
Developments

On
November 16, 1999, the Company disposed of the Maple Grove Apartments, a
304-unit apartment community in Madison, Wisconsin.  Sale consideration totaled $16.7 million, which included the
assumption of approximately $12.6 million of mortgage indebtedness.

On
October 28, 1999, the Company issued 700,000 Class A Cumulative Convertible
Preferred Shares (Class A Preferred Shares) to the public (Preferred
Offering). Each of the Class A Preferred Shares is entitled, at all meetings
of shareholders, to 3.448 votes, the number of Common Shares ($0.01 par value)
into which they are convertible, subject to adjustment for stock splits and
similar events.  The Class A Preferred
Shares are entitled to vote as a class on certain matters that affect their
respective rights.  The Class A
Preferred Shares bear a liquidation value of $10.00 per share and accrue a
dividend equal to $0.475 per share, with such dividend payable every six
months.  The Class A Preferred Shares
are convertible into the number of Common Shares equal to the quotient obtained
by dividing (1) $10.00 plus any dividends then accrued but unpaid on the Class
A Preferred Shares, by (2) $2.90, a price equal to 110% of the average closing
bid price of Common Shares over the 10 trading days preceding the effective
date of the registration statement covering the Class A Preferred Shares.  The Company has the right to redeem the
Class A Preferred Shares, under certain circumstances, after the two-year
anniversary date of the initial closing of the Preferred Offering.  On December 16, 1999, in connection with a
45-day option to purchase additional Class A Preferred Shares solely to cover
any over allotments of the Preferred Offering, the Company issued 85,037
additional Class A Preferred Shares. 
Proceeds from these sales of Class A Preferred Shares, net of
underwriters discount and total offering expenses, were $6.8 million.

In the second quarter of
1999, due principally to the fact that the Operating Partnership acquired only
three properties since November 1998, the Company entered into discussions with
AREE and WMC to restructure certain agreements. The Companys Chief Executive
Officer and two members of the Companys Board of Trustees were principal
members of AREE or related entities thereof. 
At that time, the Chairman of the Board of Trustees of the Company was
the President and Chief Executive Officer of WMC and held an aggregate 41.8%
direct and indirect interest in WMC.  As
a result of those discussions, the following occurred during 1999:

·
  Recipients of 838,372 limited partnership
  units (Units) in the Operating Partnership, received in the November 1998
  acquisitions, returned such Units to the Company for cancellation.·
  AREE returned the warrant covering 791,667
  Common Shares to the Company. 
  Further, the Company issued 254,800 Class B Junior Cumulative
  Convertible Preferred Shares (Class B Preferred Shares) to AREE as consideration
  for payment of advances to the Company for working capital purposes, costs
  incurred in connection with the Companys 1998 commercial acquisitions and
  payments for abandoned project pursuit costs.·
  As consideration for the termination of an
  advisory agreement between the Company and WMC, WMC returned the warrant
  covering 791,667 Common Shares to the Company, the Company issued 95,000
  Class B Preferred Shares to WMC and WMC retained cash payments of $550,000
  received during 1998.The
Class B Preferred Shares bore the same rights, terms and preferences as the
Class A Preferred Shares, but ranked junior as to payment of dividends and
distributions upon liquidation.  The
Class B Preferred Shares were issued for a value of $10.00 per share. The Class
B Preferred Shares were entitled to vote as a class on certain matters that
affect their respective rights.

Real Estate
Competition

The
real estate market is highly competitive. 
Competing properties may be newer or have more desirable locations than
the Companys current property holdings. If the market does not absorb newly
constructed space, market vacancies will increase and market rents may
decline.  As a result, the Company may
have difficulty leasing space within its properties and may be forced to lower
rents on leases to compete effectively.

The
Company also competes for the purchase of property with many entities,
including other publicly traded REITs. 
Many competitors have substantially greater financial resources than the
Company.  In addition, certain
competitors may be willing to accept lower returns on their investments.  If competitors prevent the Company from
buying properties that may be targeted for acquisition, the Company may not be
able to meet its capital appreciation and valuation goals.

Real Estate Tenants

During
the year ended December 31, 2000, two tenants represented approximately 31.5%
of the Companys rental revenues. 
During the year ended December 31, 1999, one tenant represented
approximately 13.3% of the Companys rental revenues.

Real Estate
Environmental Matters

The
Company is subject to various federal, state and local environmental laws.  These laws can impose liability on property
owners or operators for the costs of removal or remediation of certain
hazardous substances released on a property, even if the property owner was not
responsible for the release of the hazardous substances.  The presence of hazardous substances on
properties of the Company may adversely affect occupancy and the Companys
ability to sell or borrow against those properties.  In addition to the costs of government claims under environmental
laws, private plaintiffs may bring claims for personal injury or similar
reasons.  Various laws also impose
liability for the costs of removal or remediation of hazardous substances at
the disposal or treatment facility.  Any
entity that arranges for the disposal or treatment of hazardous substances at
such a facility is potentially liable under such laws.  These laws often impose liability whether or
not the facility is or ever was owned or operated by such person.  To date, the impact of these laws has not
been materially adverse to the operations of the Company.

Real Estate Strategy

After
giving effect to the anticipated sale of the Cold Spring property, the Company
will own four commercial properties, all of which are 100% leased.  The Company intends to continue to own and
operate these properties due to the expected cash flow results.  The Company has bought and sold various real
estate properties during its corporate history and expects to continue to
explore valuation and capital appreciation opportunities in relation to its
real estate business segment.

Technology Background

Real Estate.The U.S. commercial real estate
market is one of the largest industries in the world, representing
approximately $4.3 trillion in total aggregate asset value. The nature of
business within the commercial real estate industry is highly fragmented,
people intensive and time consuming. Management believes these inefficiencies create
an enormous opportunity for companies who deliver Internet–based
technologies that provide fast, efficient and cost saving solutions.

Core activities
such as buying, selling, servicing, building, leasing and managing are handled
primarily utilizing traditional business practices such as copying, mailing and
faxing documents, frequent phone calls and extensive travel for face–to–face
meetings. Management believes the commercial real estate industry will be
forced to evaluate new technologies as their clients and business partners
demand a more streamlined way to communicate and collaborate. Management
believes developments within and outside the industry have made commercial real
estate owners accept Internet technologies as a way of addressing these issues.

Target customers for RESofts product are
large national and regional commercial real estate owners and managers who are
leaders within this $4.3 trillion market. In addition to the size of the
market, management believes several characteristics of the real estate market
enhance the need for Web–based solutions including the fragmentation of
the commercial real estate industry and the people–intensive nature of
the real estate market. In addition to real estate owners and managers,
numerous third–party providers are involved in the maintenance of real
estate properties, and the traditional means of communicating and transacting
business has been via traditional paper means resulting in numerous
inefficiencies. The real estate industry currently relies on numerous sources
of information related to management, leasing, selling and financing real
estate, the bulk of which is usually gathered in a manual, labor–intensive
and time–intensive manner as commercial real estate owners and managers
work with a variety of different business partners and clients who are often in
different locations.

Legal and Corporate.The Internet
is having a dramatic and pervasive impact on the way that many organizations
conduct business. Law firms and corporations are looking for new and innovative
ways to use the Internet to gain competitive advantages. For example,
organizations are employing web-based technologies to disseminate, exchange and
manage information internally through corporate intranets to enable
collaboration among employees. Law firms are also using web-based technologies
to develop extranets that extend the enterprise and enable it to collaborate
directly with its partners, customers and service providers. The use of
web-based technologies has led to the development of an electronic business
environment, or e-business, where the dynamic exchange, timely dissemination
and use of information is essential to conducting business.

The
development of e-business has led to a dramatic increase in the amount of
information available to the average employee. This increase in information has
not only transformed the legal and business world but has also introduced new
complexities and challenges as employees struggle to cope with the volume and
diversity of information that they are required to process on a daily basis.
The average employee receives a broad range of information, content and
documents through a variety of sources including email, voicemail, enterprise
and desktop applications, facsimiles and photocopies, the Internet, and
intranet and extranet web sites. In addition, the growth of e-business has
resulted in a proliferation of the various forms in which employees receive and
exchange information. These new forms include media such as graphics, video,
text, audio and data. The e-business requirement that the right information be
delivered to the right person at the right time is threatened by the
overwhelming amount and variety of information that is now disseminated through
these disparate media sources. Management believes that these challenges,
combined with the commitment that the top law firms in the United States and
the Global 2000 companies have made to technology, creates enormous opportunity
for companies providing Internet-based technologies.

RESoft Solution

RESoft
offers the following services to its customers: offering of technology
consulting services including, among other services, information technology
planning and analysis, network integration services, software implementation
and migration and website development; application service provider (ASP)
service for its real estate owners and managers who utilize the Companys
product, REDocs; and the resale of various hardware or software products,
primarily document management software, to the real estate owners and managers,
law firms and major corporations.

For
the real estate industry, REDocs provides the following key benefits:

REDocs
is designed to solve many of the inefficiencies of the traditional system. By
using REDocs, a customized, Web–based application, communications between
owners and operators and their numerous clients and service providers are
streamlined and the resulting efficiency will help reduce real estate operating
costs and increase revenues. REDocs was designed to meet Internet standards and
has been developed within a robust architectural structure that is extremely
flexible, extensible and which can quickly and easily integrate with other
systems.

REDocs has been designed within an ASP
model that enables users to implement the product without significant
technological or financial barriers or can be sold as a stand-alone software
application. If our real estate customers choose the ASP version of the
software, RESofts customers do not have to host on–site document management
hardware or software or incur large, up–front capital expenditures
typically required with similar types of products. In addition, the
implementation of REDocs will not require RESofts real estate clients to have
staff with document management expertise or significantly change the way end
users work or save information, therefore, little training is required.
Finally, management believes the "stickiness" factor of the REDocs
system is substantial.  RESoft expects
that once prospective clients implement REDocs, they will have an incentive to
encourage their clients to adopt the REDocs system to further improve their
communication capabilities. Management believes this domino effect will enable
REDocs to become a dominant document management platform for the entire real
estate industry.

RESofts
experience with this type of technology has given RESoft the ability to design
a full–feature system that management believe addresses all RESofts
clients' document management needs. REDocs is distinguishable from other
"file manager" systems in that RESofts product offer top level
security capabilities, user administration that is light–weight directory
access protocol ("LDAP") compliant, meta and full text searching
capabilities, email triggers, version control, file locking, extensive logging
and reporting tools, as well as the ability to integrate with a majority of the
other commonly used back office systems in the industry. Management believes
that RESofts user friendly and robust document management system and marketing
expertise will give RESoft a competitive advantage in the real estate
technology industry.

Document
management technology represents a strategic point of entry into the commercial
real estate market for us. Management believes property owners and managers
will adopt RESofts technology as a means of decreasing costs and increasing
profitability as well as streamlining their work processes. Management believes
REDocs will save them money on administrative staff, shipping, reproduction and
various communication expenses. RESofts Web–based technology solution
enables property managers to organize, manage, and present their information to
their clients and business partners in an easy format, giving them secure
access to critical information through an Internet browser from anywhere and at
anytime. Our solution is based on several key tenets, including:

Designed by and for
the Real Estate Professional.REDocs was specifically designed for
the commercial real estate market. Both RESofts management team and RESofts
prospective clients influenced the design of the product.  Because management has an intimate
understanding of the needs of commercial real estate owners and operators,
RESoft was able to customize a standard document management system that
management believes captures the needs of this unique industry. The results are
a Web–based document management system that streamlines communication
between owners and managers and their numerous contacts, clients, and service
providers including lawyers, maintenance providers, accountants, brokers,
architects, engineers, security and telecommunications providers.Management believes real estate owners
and managers will benefit from REDocs because it can:
  Reduce time for document deliveries on sale and refinancing
  transactions;
  Reduce time expended for document retrieval and filing;
  Minimize the cost of reproducing lost documents;
  Reduce rental space for on site storage of documents;
  Reduce lease execution time and vacancy rates;
  Increase the number of prospects viewing vacant space;
  Increase tenant satisfaction on work order requests and follow–up
  communications;
  Replace the time and expense of overnight delivery of documents;
  Provide an intelligent system for qualifying the space needs of
  tenants as well as brokers;
  Provide a management tool for understanding which brokers and tenants
  are looking at space; and
  Supply real–time knowledge of financial information.Flexible and Robust
Technology.RESofts ten years of experience working with document management
systems and developing other Web–based applications has enabled RESoft to
come to the market quickly its real estate document management solution.
Designed from the ground up as a Web–based system, REDocs is built to
meet Internet standards and Internet protocols. This architecture provides
RESoft with the means of being flexible, extensible, and having the ability to
quickly and easily integrate with other Web–based systems. The system,
which is hosted at a reputable, national ISP, is designed to handle millions of
users and terabytes of data. RESoft is using hardware and software platforms
that are state–of–the–art and are from proven companies in
the technology world such as Cisco Systems, Oracle and Sun Microsystems.No Significant
Implementation Obstacles.Management designed REDocs so there
should be no significant technological or financial barriers to implementing
the product. RESofts ASP model eliminates the need for RESofts clients to
host their own hardware or software. As a result, the client need not incur any
large, upfront capital expenditures typically required to enter into an
enterprise document management system. Clients do not need to have document
management expertise on staff. 
Implementing the REDocs system does not change the way the end user
works or saves information; therefore, little training is required. This is
especially important because many different clients, contacts and business
partners will be accessing RESofts clients' system from external locations.
Finally, all documents are saved in their native format, thus maintaining their
integrity.Stickiness Factor.Management believes RESofts clients will continue to use the system
after their documents are loaded and the property managers distribute user ID's
and passwords to their clients and partners. Management expects that the
"stickiness" of REDocs will enable RESoft to achieve high customer
retention so that management can continue to focus RESofts efforts on obtaining
new clients. In addition, as major REIT's and other property owners buy and
sell properties to each other, management believes that they will help RESoft
establish market dominance by showing the value of RESofts system to other
real estate owners.Untapped Potential of
REDocs.Although on the surface, the REDocs product appears to be a standard
document management system with extensible plug–ins, there are features
inherent in the system that enable it to be used as a robust knowledge
management system. As clients increasingly use REDocs, REDocs will be gathering
information that can be used to provide them with business intelligence about
their clients, prospective clients and business partners. Management believes
that clients will be able to "grow" into REDocs over time as their
requirements become more sophisticated.For
the real estate industry, law firms and major corporations, RESofts other
services provide the following key benefits:

RESoft
resells various companies document management, e-business content and
collaboration management software products to its customers.  Through the reselling relationships, RESoft
has established credibility in the marketplace for being an expert in document
or content management solutions.  In
addition, RESofts employees have obtained significant amounts of knowledge
from their experiences in integrating these software products.  This knowledge has enabled RESofts
employees to be viewed as experts in those software products, which enables
RESoft to further its customer penetration.

Because
RESoft is not selling its own document or content management product and
because RESoft is a reseller of several companies software products, RESofts
consultants are able to be objective when it comes to evaluating a customers
needs and are able to select the software product that best meets the needs of
the customer.

Management
believes the diversity and depth of RESofts technical staff gives RESoft an
advantage over potential competitors. RESoft has a well–rounded balance
of system engineers, security experts, developers and document management
engineers, many of whom are experienced at JAVA, XML, COM, COM+, DCOM, DHTML,
PHP, ASP, Visual Basic, C++, JavaScript and Perl. RESofts staff holds dozens
of industry certifications. RESofts network engineers hold certifications with
Cisco Systems, Oracle, Sun Microsystems, Microsoft, Novell, Citrix and 3COM.
RESofts document management engineers are certified in several traditional
document management systems from companies such as Hummingbird, iManage,
SoftSolutions, GroupWise and others. RESofts highly specialized security team
has helped numerous companies and law firms with a number of different security
issues, such as firewalls, encryption, digital signatures, ethical hacking and
secure Web–based financial transactions.

RESoft Strategy

RESofts goal is to become a leading document management reseller and provider for the
real estate and legal industries as well as to major corporations.  Key elements of our strategy include:

Continue to Penetrate
The Real Estate Market. RESofts marketing
strategy to the real estate industry is designed around what management
believes is RESofts competitive advantage: existing relationships. This
strategy can be best described as "New economy tools delivered via Old economy networks."
RESofts strategy respects the parochial nature of the real estate industry by
utilizing a vast network of local real estate professionals. Management
believes that a focused effort at the local level can result in national
prominence. This bottom–up vs. top–down focus is based on our
management's past real estate marketing experience. Specific aspects of our
marketing strategy include:

Real Estate Professionals.RESofts exclusive agreement
with Venture One LLC (Venture One), whose principals have been in the
commercial real estate business for an average of nearly twenty years, gives
RESoft the ability to utilize Venture Ones national team of professionals to
market REDocs under an incentive–based fee schedule. This national
network has given RESoft access to key personnel at some of the largest
commercial real estate companies in the United States.Real Estate Trade
Organizations.RESoft management has professional contacts
at more than twenty professional organizations unique to the real estate
industry. RESofts marketing efforts with them include mailing lists, direct
contact, speaking engagements, advertising and member/organization endorsement.Viral Marketing Through Targeted Customers.  In addition to RESofts marketing efforts
with Venture One, RESoft management has professional contacts with most large
investment, institutional and corporate property owners. The marketing effort
is a "sharp–shooting" technique designed to land key customers
within a variety of investment property types (office, industrial, retail,
hotel and multi–family) and a variety of ownership structures
(investment, REIT, corporate and governmental). Management believes that these
relationships will help create a viral marketing effect.Develop Strategic Relationships.RESoft is seeking to form
strategic business alliances with technology companies in financial and
computer risk management.  RESoft
developed its product in compliance with Internet standards and protocols using
products from proven, reliable companies such as Cisco, Oracle and Sun
Microsystems. This open architecture enables RESofts product to tap into and
deliver information from other enterprise systems such as financial or customer
relationship management.Management
believes the Company is also well positioned to partner with leaders in other
areas of real estate technology. Although management believes these companies'
business models could benefit significantly from a document management system
(DMS), those companies currently do not have a DMS implemented. Most real
estate technology solutions currently lack document management products to
organize the information they are collecting from their clients. Management
believes that transactional sites are prime candidates for RESofts technology.
RESofts business developers are working to align us with market leaders in
this area to increase our penetration in the real estate industry.Develop Additional
Products and Revenue Streams.RESoft intends to continue to develop
additional innovative technology solutions to generate additional revenue
streams. Management also wants to ensure that RESoft offers the most complete
product offerings in the real estate market and strengthen what management
believes is RESofts technological advantage over its competitors. Management
expects RESofts product will serve as an entryway into commercial real estate
companies. Once RESoft has an established client base, management believes it
will allow RESoft to market other enabling technology solutions for commercial
real estate. RESofts sales process is designed to educate customers about the
need and opportunity to expand their services over time. In this way, RESoft
intends to offer additional new products to its customers or up sell them with
improved versions of existing products.Leverage Revenues
from Professional Services Group.The professional services group
currently generates the majority of RESofts revenues.  Professional services include consulting,
complex systems integration and other development services. The professional
service division has been providing services since 1991 and has since continued
to supply technology solutions to a wide range of businesses including law
firms, manufacturing companies, service organizations, retail and corporate
organizations and governmental units.Increase Scalability
of Business Model.The implementation of REDocs requires minimal capital expenditures by
commercial real estate companies. By minimizing RESofts potential clients'
costs and focusing on Web–based solutions, the REDocs model is highly
scalable and has relatively low customer acquisition costs.Expand to New Markets.The REDocs system is designed by real estate professionals for the real
estate industry. However, management believes most major industries have a
business need for document management systems and our product. RESofts product
can easily be customized for any industry and marketed to them specifically.Acquiring Related
Businesses, Products and Technologies.RESofts growth strategy includes acquiring complementary businesses in
order to achieve market presence, increase RESofts customer base and expand
RESofts product offerings.  Management
intends to acquire businesses or license products and technologies in the real
estate technology market to further RESofts development.Product and Services

Product

REDocs is a web-based document management
solution designed specifically for the needs of real estate owners and
managers.  RESoft launched a test version of REDocs during the second quarter of
2000. At the end of the third quarter of 2000, RESoft executed an agreement
with a software company to provide the software application platform for its
ASP service.  REDocs operates from this
platform.   RESoft officially
released the first version REDocs in the fourth quarter of 2000.  RESoft expects to continue to invest in
various research and development initiatives to further enhance REDocs.

REDocs is a
secure, on–line, document management system that offers a full range of
features for managing property and portfolio information. REDocs enables
property owners and managers to access property and financial information
through an Internet browser anytime from anywhere in the world. Owners can
upload all electronic files and scanned hard copy documents including
contracts, leases, blueprints, surveys, photographs, letters, and search,
retrieve and download the files from any Internet connected device.

REDocs automates
and streamlines business processes through the tracking and sharing of
electronic information, creating collaboration communities of customers
(tenants), prospective customers, employees, partners and vendors. Management
believes the creation of these communities will provide high value by reinforcing
business alliances, dramatically enhancing effectiveness of operations
accelerating customer acquisition and increasing loyalty. By connecting people,
content and projects over the Internet, REDocs is empowering organizations with
the three key elements necessary to excel in business: speed, access and
convenience.

Services

RESoft provides
consulting, complex systems integration and other development services to its
customer base.  These services are
typically performed on an hourly basis for each project.

Sales and Marketing

RESoft markets its service offerings through
a combination of a direct sales force, strategic customer relationships and the
use of the external sales and marketing company.  RESoft compensates its various channels primarily through
incentive based programs.

One significant
factor that distinguishes RESoft is its sales and marketing approach. RESoft is
taking advantage of the parochial nature of the real estate market and is
leveraging its existing relationships with people who are experienced real
estate professionals. RESoft is using the same broker network that has been in
place to buy and sell real estate for years. Through RESofts agreement with
Venture One, RESoft has the equivalent of a listing arrangement with the top
real estate professionals in 31 major markets. These individuals arrange
meetings with top executives from major REIT's, government agencies, and
Fortune 100 companies.

From a marketing
aspect, RESoft uses an easy to understand, file cabinet metaphor to describe
the user interface for navigating within the system. REDocs is designed to be
user–friendly so that users of RESofts product require little or no
training. Users simply go to an electronic file cabinet, open files within
drawers and pull or deposit documents. Management believes that the file
cabinet structure provides RESoft with not only a technological advantage, but
also gives RESoft product recognition within the real estate industry.

Management bases
the price of RESofts ASP product on the total square feet of the real estate
portfolio that is registered with the REDocs system, rather than on the number
of user licenses or disk space. 
Management did this for several reasons. First, RESofts client's senior
management may not always know the number of users who would need access to the
system, or the number of documents they have, but know the total amount of
square feet they own or manage. Second, RESoft does not want to limit the
amount of user IDs and passwords that RESofts clients distribute. Real estate
companies require the exchanging of documents with a wide range of individuals
such as brokers, tenants, potential tenants and business partners. Finally,
there is an opportunity for some of RESofts clients to do a pass through to
their tenants because of the benefit that it offers. Management believes
pricing RESofts ASP product in this way makes it easier for them to calculate
and pass through to their clients.

Customer Service,
Training and Support

RESoft
management believes that customer satisfaction is essential for our long-term
success.  RESofts technical staff
provides dependable and timely resolution of customer technical inquiries and
is available to customers by telephone, email and over the web.  In addition, RESoft also is able to offer to
its customers second line support from RESofts software vendors.  RESoft provides training courses on several
different topics to help facilitate the customers use of various software
products.

Software Development

RESoft
management believes the future success of RESoft will depend in large part on
its ability to enhance its current product, develop new products for other
industries and satisfy an evolving range of customer requirements.  RESofts software development group is
responsible for product architecture, product testing, quality assurance,
documentation and expanding the ability of REDocs to operate seamlessly with
other software platforms.

RESoft management believes the diversity and depth of
RESofts technical staff gives RESoft an advantage.  RESoft has a well–rounded
balance of system engineers, security experts, developers and document
management engineers, many of whom are experienced at JAVA, XML, COM, COM+,
DCOM, DHTML, PHP, ASP, Visual Basic, C++, JavaScript and Perl. RESofts staff
holds dozens of industry certifications. RESofts network engineers hold
certifications with Cisco Systems, Oracle, Sun Microsystems, Microsoft, Novell,
Citrix and 3COM. RESofts document management engineers are certified in
several traditional document management systems from companies such as
Hummingbird, iManage, SoftSolutions, GroupWise and others. RESofts highly
specialized security team has helped numerous companies and law firms with a
number of different security issues, such as firewalls, encryption, digital
signatures, ethical hacking and secure Web–based financial
transactions.  RESofts business and
operating results could be seriously affected if RESoft is not able to hire and
retain a sufficient number of these individuals.

The Companys software
development expenditures for the year ended December 31, 2000 were
approximately $396,000.  All software
development expenditures have been expensed as incurred. Company management
expects to continue to devote substantial resources to its software development
initiatives.

RESoft Competition

Thedocument management industry is intensely competitive, rapidly evolving and subject to
continual technological change. Management expects competition to continue to
intensify in the future. Although management currently believes it has no
direct competitors to its REDocs product, management believes that competition
may arise from three sources. First, established document management companies
who have traditionally specialized in an enterprise client/server model could
decide to penetrate the real estate document management market. Some of these
companies are iManage, Hummingbird, Intranet Solutions, and Filenet. Secondly,
other real estate technology companies who offer transactional services may
decide to partner with a document management company to offer some form of
document management as part of their service. Finally, RESoft may face
competition from internal technology initiatives by RESofts potential
customers. RESoft may be unable to compete successfully against these
organizations, which may have substantially greater capital, research,
development, sales and marketing resources than the Company has.

RESoft also faces
competition from other software resellers and technology consultants.  Management expects the competition to
continue to intensify in the future due to new entrants in the
marketplace.  RESoft may be unable to
compete successfully against these competitors, which may have substantially
greater capital, research, development, sales and marketing resources than the
Company, due to several reasons including, among others, the technical
abilities of RESofts technical staff, RESofts ability to provide additional
services to existing customers and RESofts ability to attract new customers.

Intellectual Property

Management
believes RESofts success and ability to compete is dependent on RESofts
ability to develop and protect our technology. 
To protect RESofts proprietary technology, RESoft relies on patent,
trademark, service mark, trade secret and copyright laws and contractual
restrictions.

Most of RESofts customers use of REDocs
is governed by signed written license agreements.  In addition, RESoft protects its intellectual property rights by
requiring each of RESofts employees, consultants and
executive officers to sign an assignment of inventions agreement as well as a
standard confidentiality and proprietary rights agreement. These agreements
assure management that any intellectual property developed by these individuals
becomes RESofts exclusive property.

Despite
RESofts efforts to protect its proprietary rights, RESoft may be unable to
prevent others from infringing upon or misappropriating RESofts intellectual
property.  Any steps we take to protect
RESofts intellectual property may be inadequate, time consuming and expensive.

Substantial
litigation regarding intellectual property exists in the software
industry.  To date, RESoft has not been
notified that its product infringes upon the proprietary rights of anyone else.  RESoft cannot assure anyone that others will
not claim that RESoft has infringed proprietary rights relating to current or
future products.  RESoft expects that it
would become subject to intellectual property infringement claims as the number
of competitors grows and RESofts products overlap with competitors
products.  These claims, even without
merit, could be expensive, time consuming to defend, divert managements
attention from RESofts operations and cause product delays.  If RESoft becomes liable for infringing
intellectual property rights, RESoft could be required to pay substantial
damages and to develop non-infringing technology, to obtain a license or to
cease selling the product.

RESoft
licenses certain software technology from a third party.  RESoft cannot assure anyone that this
technology license will not infringe the proprietary rights of others or will
continue to be available to RESoft on commercially reasonable terms, if at all.

Employees

We have a total
of 21 staff members located at our corporate headquarters.  Fourteen of our staff are technical experts
while the balance is comprised of sales, finance, administration and
management.

Item 2.  
Description of Property



As
of December 31, 2000, the Company owned interests in the properties described
below.

Property Location
  Year Built/ Renovated
  % Leased as of 12/31/00
  Rentable Square Feet (1)
  Total Rental Revenue (2)
  
  Tenants Leasing 10% or More of Rentable Sq.
  Ft. as of 12/31/00 & Lease Expiration DatePlymouth Technology Park I, Plymouth, MN
  1998
  100.00%
  26,186
  $185,002
  
  MicroAge, Inc. (46%)  8/03; Knight
  Machining, Inc. (28%)  9/09; United Operations (26%)  4/03Plymouth Technology Park II, Plymouth, MN
  1998
  100.00%
  26,186
  $174,570
  
  Insignia Systems, Inc. (100%)  3/04Plymouth Technology Park III, Plymouth, MN
  1998
  100.00%
  26,186
  $200,054
  
  Landscape (100%)  11/05Cold Springs Office Center, St. Cloud, MN
  1990
  100.00%
  77,533
  $901,739
  
  Cold Springs Granite (55%)  4/02; Central
  MN ECSU (14%)  9/02; BremerBank (17%)  4/05Nicollet Business VI, Burnsville, MN
  1997
  100.00%
  50,291
  $348,363
  
  Wall Effects (19%)  3/02; Quickdraw
  Design, Inc. (30%)  8/02; Xata Corp. (50%)  6/04Total
  
  
  
  $1,809,728(1)
Rentable Square Feet represents rentable square feet for office properties and
gross leaseable area for light industrial properties.

(2) Total Rental Revenue represent base
rents received during the twelve months ended December 31, 2000, excluding
tenant reimbursements, calculated in accordance with generally
accepted accounting principles determined on a straight-line basis.  Tenant reimbursements generally include
payment of real estate taxes, operating expenses, and escalations and common
area maintenance and utility charges.

Investments in Real
Estate Depreciation and Insurance Coverages

Depreciation
expense on individual real estate assets is computed using the straight-line
method based on a useful life of forty years.

In
the opinion of the Companys management, the Company has adequate insurance
coverage for the real estate properties.

Mortgage Loans and
Notes Payable

For
information relating to mortgage loans and notes payable associated with the
Companys real estate properties, refer to Part II, Item 6, Managements
Discussion and Analysis or Plan of Operation and Note 5 to the Companys
Consolidated Financial Statements included with this Form 10-KSB.

Item 3.   Legal Proceedings

On
December 29, 2000, Stonehaven notified Odeh Muhawesh, a Trustee of the Company,
that it was suspending its payment to him under a promissory note assumed by
RESoft. RESoft assumed the payment obligation in February 2000 pursuant to the
terms of the merger agreement between Company, RESoft and NETLink
International, Inc. (NETLink), a company founded and owned by Mr. Muhawesh
whereby NETLink was merged into RESoft. Management of the Company believes Mr.
Muhawesh is in default under the merger agreement for, among other things,
failure by him to cause to be transferred to RESoft 5% of the issued and
outstanding stock of MyFreeDesk.com, Inc.

Subsequently,
on January 8, 2001, Mr. Muhawesh filed a complaint against RESoft in the
District Court of Hennepin County, Minnesota alleging that RESoft failed to pay
him $350,000 on January 1, 2001 under the terms of a promissory note. The
Company has filed a counterclaim against Mr. Muhawesh requesting, among other
things, the repayment of amounts previously paid to him under the promissory
note.  The Company intends to vigorously
defend against this matter.

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

No
matters were submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this report.

The
following matters were submitted to a vote of security holders on January 25,
2001:

(a)
  Meeting type and date:
  Annual Meeting of Shareholders, January 25,
  2001(b)
  Trustees elected at meeting:
  Steven B. Hoyt, Duane H. Lund and Odeh A.
  Muhawesh(c)
  Description of each matter voted on at
  meeting:Results
of vote:

Steven B.
  HoytFor
  3,671,648Against or withheld
  7,586Abstentions and broker non-votes
  0

Duane H. LundFor
  3,196,219Against or withheld
  483,015Abstentions and broker non-votes
  0

Odeh A.
  MuhaweshFor
  909,917Against or withheld
  2,769,317Abstentions and broker non-votes
  0PART II

Item 5.  Market for Common
Equity and Related Shareholder Matters



The
Common Shares of the Company began trading on the AMEX on October 28, 1999
under the symbol RPP.   The Class A
Preferred Shares of the Company began trading on the AMEX on October 28, 1999
under the symbol RPP.A.

The
table below shows the range of the high and low sale prices for the Common
Shares of the Company as reported on the AMEX and the NASDAQ Small Cap, as well
as the Common Share quarterly dividends per share declared.  The quotations shown represent interdealer
prices without adjustment for retail markups, markdowns or commissions, and may
not reflect actual transactions.

Quarter
  High (1)
  Low (1)
  Cash Dividends 
  Declared Per  
  Common Share (1)First
  Quarter, 1999
  $6.33
  $3.48
  $0.11Second
  Quarter, 1999
  $4.75
  $4.38
  $0.11Third
  Quarter, 1999
  $4.94
  $3.00
  $0.11Fourth
  Quarter, 1999
  $3.88
  $2.25
  $0.11First
  Quarter, 2000
  $5.13
  $3.31Second
  Quarter, 2000
  $4.75
  $2.63Third
  Quarter, 2000
  $3.56
  $2.38Fourth
  Quarter, 2000
  $2.38
  $0.69(1) Adjusted to give effect to the Stock
Split, described below.

On
March 1, 2001, the last reported sales price of the Companys Common Shares on
the AMEX was $1.7656.  The number of holders
of record of the Common Shares of the Company was approximately 300 as of March
1, 2001 and the Company estimates it has approximately 700 holders of common
beneficial interest as of that same date.

The
Companys payment of future cash distributions is at the discretion of the
Board of Trustees.  The Companys
ability to pay cash distributions in the future is dependent upon (i) the
income and cash flow generated from operations, (ii) cash generated or used by financing
or investing activities and other factors as the Board of Trustees deems
relevant.  The Companys ability to make
cash distributions will also be limited by the terms of the Operating
Partnership Agreement, the financing arrangements of the Company as well as
limitations imposed by state law and the agreements governing any future
indebtedness.

Stock Split

On
March 16, 1999, the Company declared a 4.75 for 3.00 share split for its Common
Shares payable on March 24, 1999 to shareholders of record as of March 22, 1999
(the "Stock Split").  All
amounts herein have been adjusted to give effect to the Stock Split.

New Issuances and
Conversions

On
November 20, 1998, the Company issued 2,557,707 Units in the Operating
Partnership in connection with the acquisition of three commercial properties.  The Units are exchangeable into Common
Shares, subject to certain conditions. 
Effective June 30, 1999, 838,372 of these Units were returned to the
Company and cancelled.

On August 12, 1999, the Company issued
254,800 Class B Preferred Shares to AREE as consideration for payment of
advances to the Company for working capital purposes, costs incurred in
connection with the Companys 1998 commercial acquisitions and payments for
abandoned project pursuit costs.  Further,
on August 12, 1999, the Company issued 95,000 Class B Preferred Shares to WMC
as partial consideration for the termination of the incentive advisory
agreement between the Company and WMC.

On
February 18, 2000, the Board of Trustees approved the conversion of 1,657,437
Units of the Operating Partnership into 1,468,484 Common Shares and further
approved the conversion of the 254,800 Class B Preferred Shares held by AREE
into 808,482 Common Shares.

On
February 24, 2000, the Company acquired RESoft.  The acquisition was accomplished by exchanging 914,292 of the
Company's Common Shares for all of the issued and outstanding stock of RESoft
valued at $4.375 per share, or an aggregate value of approximately
$4.0 million.In
connection with the acquisition, the Company issued to the President, currently
the Chief Knowledge Officer, options as to 1.0 million Common Shares at a price
of $5.375 per share.  The options are
exercisable as to 500,000 shares immediately, with options as to 62,500 shares
exercisable quarterly, commencing May 24, 2000.  The Company also issued to the Chief Executive Officer options as
to 666,667 Common Shares at a price of $6.375 per share.  The options are exercisable as to 333,333
shares immediately, with options as to 41,667 shares exercisable quarterly,
commencing May 24, 2000.  Further by
agreement, the Company set aside a pool of options as to 200,000 Common Shares
for future award to employees of RESoft.

On
February 29, 2000, the Company through the Operating Partnership acquired
three commercial real estate properties located in suburban Minneapolis,
Minnesota ("Plymouth Properties"). The Plymouth Properties were
purchased from a related party for an aggregate purchase price of approximately
$6.7 million. The purchase price was funded through the issuance of an aggregate
of 181,629 limited partnership units ("Plymouth Units") in the
Operating Partnership (valued at $4.35 per Plymouth Unit, or an aggregate value
of approximately $790,000), the assumption of certain third–party debt
totaling approximately $4.5 million, secured by the Plymouth Properties, and
the balance paid in cash.

In issuing all of
the above securities, the Company relied on the exemption from registration
under Section4 (2) of the Securities Act of 1933, as amended.

Reacquired Shares

On June 30,
2000, the Company transferred and sold to Wellington Management Corporation
("WMC") the Company's 100% interest in Lake Pointe Apartment
Homes, Inc., a Wisconsin corporation and wholly–owned subsidiary of
the Company ("Lake Pointe") and the Company's 8% equity interest in
Highlander Acquisition Company, LLC, a Wisconsin limited liability company
("Highlander"). The interests were exchanged for 95,000 shares of the
Company's Class B Junior Cumulative Convertible Preferred Shares owned by
WMC and WMC assumed the mortgage debt totaling approximately $2.7 million
associated with Lake Pointe.

On
December 29, 2000, the Operating Partnership sold its membership interest in
its wholly-owned subsidiary WPT I, LLC, a Delaware limited liability company
("WPT I") and owner of the Thresher Square property ("Thresher
Property"), to four individuals ("Buyers"), in exchange for
$169,874 in cash, 522,416 shares of common stock of the Company and 61,898
units of WPT I, all of which will be cancelled, and the release of
approximately $6.6 million of debt.  WPT
I originally purchased the Thresher Property from the Buyers, one of which is a
Trustee of Stonehaven.

Item 6.   Management's
Discussion and Analysis or Plan of Operation

The
following discussion should be read in conjunction with consolidated financial
statements and notes thereto included elsewhere herein.

Risk Factors

This
report on Form 10-KSB contains 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. Forward–looking statements
that are based on certain assumptions, and describe future plans, strategies
and expectations of the Company, are generally identifiable by use of the words
"believe", "expect", "intend",
"anticipate", "estimate", "project" or similar
expressions.   These statements are not
guarantees of future performance, events or results and involve potential risks
and uncertainties.  Accordingly, actual
performance, events or results may differ materially from such forward-looking
statements.  Management undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise.

Factors that could
cause actual results to differmaterially from
current expectations include, but are not limited to, changes in general
economic conditions, changes in interest rates, legislative and regulatory
changes, changes in monetary and fiscal policies of the U.S. government,
including policies of the U.S. Treasury and the Federal Reserve Board, changes
in local real estate conditions (including rental rates and competing
properties), changes in industries in which the Company's principal tenants
compete, the failure to timely lease unoccupied space, the failure to timely
re-lease occupied spaced upon expiration of leases, the inability to generate
sufficient revenues to meet debt service payments and operating expenses, the
unavailability of equity and debt financing, unanticipated costs associated
with the Company's acquisitions, potential liability under environmental or
other laws and regulations, expanding a new line of business, customer demand
for online services and products, uncertainty of emerging online services,
ability to meet competition, loss of existing key personnel, ability to hire
and retain future personnel, the failure of the Company to manage its growth
effectivelyand other risks identified in this filing or other reports
of the Company filed with the Securities and Exchange Commission.  These risks and uncertainties should be
considered in evaluating forward–looking statements and undue reliance
should not be placed on such statements. Further information concerning the
Company and its business, including additional factors that could materially
affect the Company's financial results is included in other Company filings
with the Securities and Exchange Commission.

Overview

The
Company was formed on March 15, 1994 as a Maryland real estate investment
trust.  The Company has operated as a
traditional real estate investment trust by buying, selling, owning, and
operating commercial and residential properties. The Company derived
substantially all of its revenues since inception through February 2000 from
these real estate operations.

In
February 2000, the Company acquired RESoft, Inc. (RESoft), a Minnesota
corporation that has developed a software application and that provides
information technology services useful in the real estate and other industries.
During the remainder of 2000, the Company developed RESofts additional product
offering and included in its overall business focus the development and sale of
RESofts software product and services.  
Since the acquisition, the Company has placed increasing emphasis on the
enhancement of the technology business and expects to continue to do so in the
future. As a result of the RESoft operations, the Company is no longer a REIT
for federal tax purposes but maintains its status as a REIT under Maryland law.  For the year ended December 31, 2000, the
Company incurred a tax loss and as a result, does not expect to incur a
material federal income tax liability for the year.

Also
during 2000 for a variety of reasons, including making available our cash
resources for the Companys technology operations by reducing the Companys
debt obligations, the Company sold two of its properties including the
Companys last residential property and the Company anticipates closing on or
about March 31, 2001, the sale of its Cold Spring property. The Company intends
to maintain and operate its remaining commercial properties, all of which are
100% leased, due to the expected cash flow results.   The Company may, in the future, buy or sell additional
properties depending upon a variety of factors including the successfulness of
RESoft, general economic conditions, availability to obtain financing,
valuation and capital appreciation of real estate generally, the Companys debt
levels, and other factors listed under the caption Risk Factors.

Real Estate Segment

As
of December 31, 2000, the Company owned the following five commercial real
estate properties:

·
  A 26,186 square-foot light industrial
  facility in Plymouth, Minnesota,·
  A 26,186 square-foot light industrial
  facility in Plymouth, Minnesota,·
  A 26,186 square-foot light industrial
  facility in Plymouth, Minnesota,·
  A 77,533 square-foot office building in St.
  Cloud, Minnesota, and·
  A 50,291 square-foot light industrial
  facility in Burnsville, MinnesotaAs of December 31, 2000, Management believes
that the Company is organized and operates in a manner that satisfies the
requirements to be treated as a REIT under Maryland law.  However, for the year ended December 31,
2000, the Company believes it no longer satisfies the requirements for taxation
as a REIT under the Internal Revenue Code of 1986.  For the year ended
December 31, 2000, the Company was in a taxable loss position, and as a
result, will not be subject to federal income taxes.

The
Company expects to continue to own and operate its light industrial facilities
in 2001.  The Company expects its
properties will remain 100% occupied and will continue to provide a predictable
cash flow and operating results.   The Company
also expects to continue to review and analyze valuation and capital appreciation
opportunities for its real estate portfolio including refinancing, exchanging
or disposition alternatives.

Technology Segment

On February 24, 2000, the Company acquired
RESoft.  Since 1991, RESoft has offered
various information technology services and has been a reseller of various
computer hardware and software products. 
Subsequent to the acquisition, the Company has continued to provide
similar service offerings and in addition and has introduced a proprietary
product, REDocs, that adds certain features to existing document management
software products. RESofts goal is to become a leading document management reseller and provider for the real estate and legal
industries as well as to major corporations.

RESoft offers the following services to its
customers: offering of technology consulting services including, among other
services, information technology planning and analysis, network integration
services, software implementation and migration and website development;
application service provider (ASP) service for its real estate owners and
managers who utilize REDocs; and the resale of various hardware or software
products to the real estate and legal industries as well as to major
corporations.

REDocs is a web-based document management
solution designed specifically for the needs of real estate owners and
managers.  RESoft launched a test version of REDocs during the second quarter of
2000. At the end of the third quarter of 2000, RESoft executed an agreement
with a software company to provide the software application platform for its
ASP service.  REDocs operates from this
platform.   RESoft officially
released the first version REDocs in the fourth quarter of 2000.  RESoft expects to continue to invest in
various research and development initiatives to further enhance REDocs.

RESoft markets its service offerings through
a combination of a direct sales force, strategic customer relationships and the
use of the external sales and marketing company.  RESoft compensates its various channels primarily through
incentive based programs.

Acquisition/Dispositions of Properties and
Consolidated Subsidiary

On
December 29, 2000, the Operating Partnership sold its membership interest in
WPT I, the owner of the Thresher Property, to the Buyers, in exchange for
$169,874 in cash, 522,416 shares of common stock of the Company and 61,898
units of WPT I, all of which will be cancelled, and the release of
approximately $6.6 million of debt. In connection with the sale, cash in the
amount of $805,000 securing a letter of credit granted by the Company in favor
of the mortgagee of the Thresher Property and the letter of credit will be
released. Additionally, the Company is released from its obligation to
indemnify one of the Buyers, who is also a member of the Board of Trustees of
the Company, from amounts incurred by him under personal guaranties related to
the Thresher Property which remained in place after the original purchase by
WPT I.  WPT I originally purchased the
Thresher Property from the Buyers, one of which is a Trustee of the
Company.  The disposition resulted in no
gain or loss being recorded due to the related party nature of the transaction.

On
June 30, 2000, the Company transferred and sold to WMC the Company's 100%
interest in Lake Pointe and the Company's 8% equity interest in Highlander. The
interests were exchanged for 95,000 shares of the Company's Class B Junior
Cumulative Convertible Preferred Shares owned by WMC and, WMC assumed the
mortgage debt totaling approximately $2.7 million associated with Lake
Pointe. In connection with the dispositions, (a) the listing agreement
between the Company and WRI was terminated and no brokerage commission was paid
to WRI; (b) the Chairman of the Board of Trustees of the Company resigned
effective June 30, 2000; and (c) a President, who was also the
Secretary, of the Company entered into a Separation Agreement with the Company
effective June 30, 2000.  The
disposition resulted in no gain or loss being recorded due to the related party
nature of the transaction.

On
February 29, 2000, the Company through the Operating Partnership acquired
the Plymouth Properties. The Plymouth Properties were purchased from a related
party for an aggregate price of approximately $6.7 million. The purchase price
was funded through the issuance of an aggregate of 181,629 limited partnership
units ("Units") in the Operating Partnership (valued at $4.35 per
Unit, or an aggregate value of approximately $790,000), the assumption of
certain third–party debt totaling approximately $4.5 million, secured by
the Plymouth Properties, and the balance paid in cash. The acquisition was
accounted for using the purchase method of accounting.

On
February 24, 2000, the Company acquired RESoft. The acquisition was
accounted for using the purchase method of accounting and was accomplished by
exchanging 914,292 of the Company's common shares for all of the issued and
outstanding stock of RESoft valued at $4.375 per share, or an aggregate of
approximately $4.0 million.

Loss of REIT Income Tax Status and Current
Tax Status

The Company has
historically operated as a REIT and maintained its qualification as a REIT
under Sections 856 through 860 of the Internal Revenue Code (the
"Code"). As a REIT, the Company generally was not subject to federal
income tax. To qualify as a REIT under the Code for a taxable year, the Company
must meet certain requirements relating to its assets, income, stock ownership
and distributions to shareholders.

For the year ended December 31, 2000, the Company did not
qualify as a REIT under the Code due to
RESofts operations.  Due to the
Companys failure to qualify as a REIT, the Company is now subject to federal
income tax on all of its taxable income at regular corporate rates and will not
receive a deduction for dividends paid to its shareholders. Additionally, any
distributions to shareholders generally will be taxable to the shareholders as
ordinary income to the extent of current and accumulated earnings and profits.
Thus, the Company's income would be subject to double taxationat the corporate level and
the shareholder level to the extent such income is distributed to shareholders.
For the year ended December 31, 2000, the Company was in a taxable loss
position.Accordingly, no provision has been made for federal income
taxes in the accompanying consolidated financial statements.

Failure to
qualify as a REIT for the year ended December 31, 2000 disqualifies the Company
from taxation as a REIT for the next four taxable years and could result in the
Company incurring indebtedness or liquidating investments should the Company
not have sufficient funds to pay the resulting federal income tax liabilities.
As a result, the funds available for distribution to the Company's shareholders
would be reduced for each of the years involved. In addition, dividend payments
subject to the Code would no longer be required.

Results of Operations

Our
revenues traditionally include rental revenues and tenant improvements and now
also include revenues from technology consulting services and sales of hardware
and software. The Company anticipates that revenues from the Companys
technology operations will increase in the future while our revenues from real
estate, which have decreased due to the real estate dispositions, will remain
constant in future periods subject to the effects of possible acquisitions,
dispositions, general economic factors and fluctuations in owning and operating
real estate generally.

Rental revenues
decreased primarily as a result of the Company's disposition of the Maple Grove
Apartments and Lake Pointe, offset, in part, by the acquisition of the Plymouth
Properties. Tenant recoveries increased primarily as a result of the Company's
acquisition of the Plymouth Properties. Professional services and sales of
hardware and software resulted from the acquisition of RESoft. Interest and
other income increased primarily as a result of interest earned on invested
funds as a result of the Class A Preferred Share offering.

Property,
operating and maintenance, property taxes and insurance, management fees and
interest expense decreased primarily as result of the Company's disposition of
the Maple Grove Apartments and Lake Pointe, offset, in part, by the acquisition
of the Plymouth Properties.  Advertising
and promotion and general and administrative expenses increased primarily as a
result of the Company's acquisition of RESoft. 
Costs of professional services, sales of hardware and software and
software development were a result of the Company's acquisition of RESoft.  Depreciation and amortization increased
primarily as a result of amortization of goodwill resulting from the
acquisition of RESoft, amortization of the value assigned to certain warrants,
amortization of the non-refundable prepaid minimum royalty and depreciation
from the acquisition of the Plymouth Properties offset, in part, by reduced
depreciation as a result of the disposition of the Maple Grove Apartments and
Lake Pointe.  Nonrecurring expenses in
2000 related to the costs associated with abandoned projects, fixed asset
disposals and the severance package associated with the disposition of Lake
Pointe.  Nonrecurring expenses in 1999
related to the abandonment of certain potential acquisitions and the partial
termination of the incentive advisory agreement between WMC and the Company.

The equity in
income of unconsolidated subsidiary resulted from the Company's 8% equity
interest in Highlander.

The loss on sale
of investment in real estate was the result of the loss accrual recognized on
the expected sale of the St. Cloud, Minnesota property.

On March 29,
2000, the Company declared a dividend of $0.475 per share aggregating to
approximately $328,000 with respect to the Class A and Class B
Preferred Shares. On October 20, 2000, the Company declared a dividend of
$0.475 per share aggregating to approximately $316,000 with respect to the
Class A Preferred Shares. No Class B Preferred Shares are currently
outstanding.

Liquidity and Capital
Resources

Cash
provided by operations, equity transactions, borrowings from affiliates and
lending institutions have generally provided the primary sources of liquidity
to the Company.  Historically, the
Company has used these sources to fund operating expenses, satisfy its debt
service obligations and fund distributions to shareholders.

The
Company anticipates using its cash and cash equivalents, restricted cash that
is released to the Company, cash from dispositions and cash provided by
operations primarily to the fund the technology operations.  The Company anticipates that its cash
sources will be able to maintain these operations for the next fiscal year if
not longer.  If not, the Company will
need to seek additional financing which cannot be guaranteed if its real estate
operations are unable to fund the deficit.

On
December 29, 2000, the Operating Partnership sold its membership interest in
WPT I, the owner of the Thresher Property, to the Buyers, in exchange for
$169,874 in cash, 522,416 shares of common stock of the Company and 61,898
units of WPT I, all of which will be cancelled, and the release of
approximately $6.6 million of debt. In connection with the sale, cash in the
amount of $805,000 securing a letter of credit granted by the Company in favor
of the mortgagee of the Thresher Property and the letter of credit will be
released.

On October 20,
2000, the Company declared a dividend of $0.475 per share with respect to the
Class A Preferred Shares. The dividend with respect to the Class A
Preferred Shares was paid on November 15, 2000 to shareholders of record
on November 1, 2000.

On September 28,
2000, RESoft entered into two licensing agreements with IntraNet
Solutions, Inc., a software vendor (the "Vendor"). The first
agreement, an ASP Software License Agreement, granted RESoft a nontransferable
license to use the Vendor's proprietary software in connection with RESofts
application software products for a two-year period in connection with RESofts
subscription services for its suite of products. RESoft paid the Vendor a
non-refundable minimum royalty of approximately $200,000 and is obligated to
pay a portion of all revenues derived from any RESoft product that uses the
Vendor's proprietary software in excess of $200,000.   The second agreement, a Value Added Reseller (VAR) License
Agreement, grants RESoft the right for two years to use, reproduce, sublicense
and distribute the Vendor's proprietary software in connection with the sale of
RESofts existing suite of products directly to non-subscription based
customers.  RESoft is obligated to pay the
Vendor a non-refundable, prepaid minimum royalty totaling $1.5 million in
escalating installments during the next twelve months. RESoft is also obligated
to pay the Vendor an amount equal to its list price for the software less an
agreed upon discount. Amounts remitted to the Vendor under this license
agreement will be credited against the $1.5 million non-refundable,
prepaid minimum royalty.

On July 1,
2000, the Company determined that it was in the Company's and its shareholders'
best interests to suspend Common Share quarterly dividends to either expand
operations or repurchase its Common Shares pursuant to an authorized stock
repurchase program. The Board of Trustees of the Company authorized the Company
to repurchase, on a quarterly basis, up to 150,000 Common Shares of the Company
in open market transactions. During the year ended December 31, 2000, the
Company purchased 15,300 Common Shares at an aggregate cost $40,000.  For the year ended December 31, 2000, no
dividends had been declared on the Common Shares.

On June 30,
2000, the Company transferred and sold to WMC the Company's 100% interest in
Lake Pointe and the Company's 8% interest in Highlander. The interests were
exchanged for 95,000 shares of the Company's Class B Junior Cumulative
Convertible Preferred Shares owned by WMC and, WMC assumed the mortgage debt
totaling approximately $2.7 million associated with Lake Pointe.

On March 29,
2000, the Company declared a dividend of $0.475 per share with respect to the
Class A Preferred Shares and the Class B Preferred Shares. The
dividend with respect to the Class A Preferred Shares and Class B
Preferred Shares was paid on May 5, 2000 and June 30, 2000,
respectively, to shareholders of record on April 21, 2000.  All outstanding Class B Preferred Shares
were returned to the Company on June 30, 2000.

RESoft entered
into an exclusive marketing agreement with Venture One Real Estate, LLC
("Venture One"), a national real estate brokerage firm with a
national network of real estate professionals. The initial term of the
agreement is for three years but will renew for different periods of time
depending upon the RESoft product if certain events occur. RESoft will pay
Venture One a commission equal to 20%, 17.5% and 15% of gross collections
derived from clients whether or not referred by Venture One during the first,
second and third year, respectively, after the property is entered into
RESofts system. An additional 2.5% will be paid on gross collections for
clients referred by an independent broker.

RESoft may
terminate the agreement at various times for Venture One's failure to obtain
certain sales quotas and in the event of a change of control of RESoft. In
either case, RESoft will continue to pay Venture One its commissions at the
applicable rate for three years for those clients existing at the date of
termination and a $400,000 termination fee. As long as Venture One continues to
meet specified sales quotas, and no change of control occurs, the agreement
shall remain in effect until August 31, 2010 unless terminated by mutual
consent. If RESoft discontinues marketing to market its products, RESoft will
be required to pay Venture One its commissions at the applicable rate for three
years for those clients existing at the date of termination and a $400,000
termination fee.

On
February 29, 2000, the Company through the Operating Partnership acquired
the Plymouth Properties. The Plymouth Properties were purchased from a related
party for an aggregate price of approximately $6.7 million. The purchase price
was funded through the issuance of an aggregate of 181,629 limited partnership
units ("Units") in the Operating Partnership (valued at $4.35 per
Unit, or an aggregate value of approximately $790,000), the assumption of
certain third–party debt totaling approximately $4.5 million, secured by
the Plymouth Properties, and the balance paid in cash.

On February 24, 2000, the Company acquired RESoft.
The acquisition was accomplished by exchanging 914,292 of the Company's common
shares for all of the issued and outstanding stock of RESoft valued at $4.375per share, or an aggregate of approximately $4.0 million.In connection with the acquisition, the
Company issued to the President, currently the Chief Knowledge Officer, options
as to 1.0 million Common Shares at a price of $5.375 per share.  The options are exercisable as to 500,000
shares immediately, with options as to 62,500 shares exercisable quarterly,
commencing May 24, 2000.  The Company
also issued to the Chief Executive Officer options as to 666,667 Common Shares
at a price of $6.375 per share.  The
options are exercisable as to 333,333 shares immediately, with options as to
41,667 shares exercisable quarterly, commencing May 24, 2000.  Further by agreement, the Company set aside
a pool of options as to 200,000 Common Shares for future award to employees of
RESoft.

On
February 18, 2000, the Board of Trustees approved the conversion of 1,657,437
Units of the Operating Partnership into 1,468,484 Common Shares and further
approved the conversion of the 254,800 Class B Preferred Shares held by AREE
into 808,482 Common Shares.

During
1999, the Company issued 785,037 Class A Preferred Shares.  Proceeds from the sales of the Class A
Preferred Shares, net of underwriters discount and total offering expenses,
were $6.8 million.

On
November 16, 1999, the Company disposed of the Maple Grove residential
property.  Sale consideration totaled
$16.7 million, which included the assumption of approximately $12.6 million of
mortgage indebtedness.

In
the second quarter of 1999, due principally to the fact that the Operating
Partnership acquired only three properties since November 1998, the Company
entered into discussions with AREE and WMC. 
As a result of these discussions, the following occurred during 1999:

·
  Recipients of 838,372 limited partnership
  units (Units) in the Operating Partnership, received in the November 1998
  acquisitions, returned such Units to the Company for cancellation.·
  AREE returned the warrant covering 791,667
  Common Shares to the Company. 
  Further, the Company issued 254,800 Class B Junior Cumulative
  Convertible Preferred Shares (Class B Preferred Shares) to AREE as
  consideration for payment of advances to the Company for working capital
  purposes, costs incurred in connection with the Companys 1998 commercial
  acquisitions and payments for abandoned project pursuit costs.·
  As consideration for the termination of the
  advisory agreement between the Company and WMC, WMC returned the warrant
  covering 791,667 Common Shares to the Company, the Company issued 95,000
  Class B Preferred Shares to WMC and WMC retained cash payments of $550,000
  received during 1998.The
Class B Preferred Shares bore the same rights, terms and preferences as the
Class A Preferred Shares, but ranked junior as to payment of dividends and
distributions upon liquidation.  The
Class B Preferred Shares were entitled to vote as a class on certain matters
that affected their respective rights.

As
of December 31, 2000, the Company had approximately $13.9 million of debt
outstanding consisting of mortgage loans and notes payable (which had a
weighted average interest rate of 9.3%
and mature between September 2000 and February 2008).

The Company has no other material contractual
obligations for property acquisition, material capital costs, other than tenant
improvements in the ordinary course of business, or operating expenses. The
Company expects to meet its long-term capital needs through a combination of
cash from operations, net cash proceeds from sales of real estate, additional
borrowings and additional equity issuances of Common or Preferred Shares.

Cash Flows

During the year
ended December 31, 2000, the Company generated (i) approximately $5.2
million from the redemption of marketable securities; (ii) approximately
$161,000 from net cash proceeds in connection with the RESoft acquisition;
(iii) approximately $171,000 from net cash proceeds in connection with the
disposition of Lake Pointe and Highlander and the Thresher Property; and
(iv) approximately $7,000 from distributions from Highlander. These cash
flows were used primarily for (i) acquisition of and additions to real
estate properties of approximately $1.4 million; (ii) acquisition of
computer hardware, software and other fixed assets of approximately $902,000;
(iii) repurchases of treasury shares of approximately $40,000;
(v) payment of cash dividends, net of the Company's dividend reinvestment
plan of approximately $749,000; (vi) repayments of debt obligations
aggregating approximately $1.0 million; and (vii) cash used in operating
activities of approximately $2.7 million. As a result, the Company's cash
balance decreased by approximately $1.3 million from approximately $2.9 million
at December 31, 1999 to approximately $1.6 million at December 31, 2000.

Recent Accounting
Pronouncements

In
April 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 98-5,
Reporting on the Costs of Start-Up Activities (SOP 98-5).  SOP 98-5 requires that the net unamortized
balance of all start up costs and organizational costs be written off as a
cumulative effect of a change in accounting principle and all future start-up
costs and organizational costs should be expensed.  In 1999, the Company reported cumulative effect of a change in
accounting principle in the amount of $35,565 to reflect the write-off of the
unamortized balance of organizational costs.

In
June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (FAS 133) FAS 133, as amended,
establishes methods of accounting for derivative financial instruments and
hedging activities related to those instruments as well as other hedging
activities.  The Company will be required
to adopt FAS 133 effective January 1, 2001. 
Because the Company does not use derivative financial instruments, the
Company does not believe the impact of FAS 133 will be material to the
Companys consolidated financial position or results of operations.

In
December 1999, the Securities and Exchange Commission (SEC) issued SEC Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
(SAB 101).  SAB 101 provides guidance
on the recognition, presentation, and disclosure of revenue in financial
statements.  In October 2000, the SEC
issued a Frequently Asked Questions document on SAB 101 to provide further
definitive guidance on the implementation of SAB 101.  SAB 101 is effective for years beginning after December 15, 1999
and the Company was required to adopt SAB 101 in the quarter ended December 31,
2000 retroactive to the beginning of the year. 
SAB 101 did not have an effect on the Companys results of operations,
financial position or cash flows.

Inflation

Inflation
has not generally had a significant impact during the periods presented on the
Company because of the relatively low inflation rates in the markets in which
the Company's properties operate. Most of the Company's tenants in the
commercial properties are contractually obligated to pay their share of
operating expenses thereby reducing exposure to increases in such costs
resulting from inflation.

Item 7.  Financial Statements

The
required audited consolidated financial statements of the Company are included
herein.

Item 8.  Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure

On
November 9, 2000, PricewaterhouseCoopers LLP (PWC) resigned as the Companys
independent auditors.

On
February 2, 2001, The Companys Board of Trustees appointed Boulay, Heutmaker,
Zibell & Co. P.L.L.P. as independent auditors for the Company for the
fiscal year ended December 31, 2000.

The
Company is not aware of any disagreement with PWC during the year ended
December 31, 1999 and through November 9, 2000, the date PWC resigned as the
independent accountants of the Company, on any matters of accounting principles
or practices, financial statement disclosures, or auditing scope or procedures.

PART III

Item 9.  Trustees, Executive
Officers, Promoters and Control Persons, Compliance with Section 16(a) of the
Exchange Act



Board of Trustees,
Executive Officers, Significant Employees and Family Relationships

The
Trustees and Officers of the Company, their ages at March 1, 2001 and their
positions and offices held with the Company are as follows:

Name
  Age
  Term Expires
  Position and
  Offices HeldSteven B. Hoyt
  48
  2003
  Chairman of the Board of TrusteesPaul T. Lambert
  48
  2001
  TrusteeRobert D. Salmen
  45
  2002
  TrusteeMark S. Whiting
  43
  2002
  TrusteeOdeh A. Muhawesh
  42
  2001
  Trustee and Chief Knowledge OfficerDuane H. Lund
  36
  2003
  Trustee, Chief Executive Officer, Chief
  Financial Officer and Secretary of the CompanyMary S. Henschel
  34
  N/A
  President, RESoft, Inc.Steven
B. Hoyt has been a Trustee since November 1998.  He has served as Chief Executive Officer of Hoyt Properties, Inc.
from 1989 to present.  Hoyt Properties
currently owns over 1,000,000 square feet of industrial and office property in
Minnesota and has developed over 5,000,000 square feet of commercial property
since its inception.  From 1994 to 1995,
Mr. Hoyt served as a Senior Regional Director of First Industrial Realty Trust,
Inc. Mr. Hoyt is a member of the board of directors of the Better Business
Bureau and has served in numerous state and national positions for the National
Association of Industrial and Office Parks (NAIOP).

Paul T. Lambert has been a Trustee since November 1998.  Mr. Lambert is currently the Chief Executive Officer of Lambert Capital Corporation.  He served on the board of directors and was
the chief operating officer of First Industrial Realty Trust, Inc. from its
initial public offering in June 1994 to the end of 1995.  Mr. Lambert was one of the largest
contributors to the formation of First Industrial and one of its founding
shareholders.  Prior to forming First
Industrial, Mr. Lambert was managing partner of the Midwest region for The
Shidler Group, a national private real estate investment company.  Prior to joining Shidler, Mr. Lambert was a
commercial real estate developer with Dillingham Corporation and, prior to
that, was a consultant with The Boston Consulting Group.  Mr. Lambert was also a founding shareholder
of CGA Group, Ltd., a holding company whose subsidiary is a AAA-rated financial
guarantor based in Bermuda.

Robert
D. Salmen has been a Trustee since August 1999.  Mr. Salmen founded Equity Financial Services in 1993.  While continuing to operate Equity
Financial's investment services company, he co-founded Equity Commercial
Services in 1996 to incorporate leasing and property management services for
Equity Financial and currently serves as its president.  Prior to founding Equity Financial Services,
Mr. Salmen was vice president of institutional investment sales with Welsh
Companies for eight years.  He
established the Institutional Investment division at Welsh Companies in
1985.  From its inception through 1992,
he directed Welsh's sales marketing force. 
Prior to joining Welsh, Mr. Salmen spent over nine years with Towle Real
Estate.

Mark S. Whiting has been a
Trustee since October 1999.  Mr. Whiting
has an extensive public REIT background, having served as the President and a
member of the board of directors of TriNet Corporate Realty Trust, Inc. (NYSE:
TRI) from 1993 until 1998 and as its Chief Executive Officer from 1996 until
1998.  At the time, TriNet owned a
commercial real estate portfolio consisting of over 20 million square feet
located in 26 states and a total market capitalization of $1.6 billion.

Odeh
A. Muhawesh has been a Trustee since February 2000 and was appointed the
President of the Company on February 24, 2000 in connection with the Companys
acquisition of RESoft, Inc. (formerly NETLink International, Inc.)  Mr. Muhawesh currently serves as RESofts
Chief Knowledge Officer. Mr. Muhawesh was
the founder, Chairman and CEO of NETLink International and was an Advisory
Board Member of Intellops. Mr. Muhawesh has served as the Chairman of 3B
Software and as a board member of RSSI.

Duane
H. Lund has been the Chief Executive Officer of the Company since November 1998
and has been a Trustee since December 1999. 
Mr. Lund was a founding shareholder of First Industrial Realty Trust,
Inc. and served as a Senior Regional Director of First Industrial from 1994 to
1998.  In such capacity, Mr. Lund acquired
and managed over 11,000,000 square feet of commercial property with a value in
excess of $750 million.  From 1989 to
1994, Mr. Lund was an acquisition partner with The Shidler Group, where he was
involved in coordinating the underwriting and due diligence for over $200
million of commercial property.  Mr.
Lund is a member of the boards of directors of the Wisconsin Real Estate Alumni
Association and former board member of the National Association of Industrial
and Office Properties, Minnesota Chapter and former member of the advisory
boards of the Midwest Real Estate News, the Minnesota Real Estate Journal and a
current member of the KPMG Peat Marwick Alumni Association.

Mary
S. Henschel has been the President of RESoft, Inc. since its acquisition by the
Company on February 24, 2000.  Ms.
Henschel is currently and Advisory Board Member of Intellops and the
Chairperson of Service Bidding, Inc. Ms. Henschel is the former President of
NETLink International and was the President of the Minnesota CNEPA/NPA Chapter.   Ms. Henschel holds a B.A. degree from St.
Olaf College.

Compliance with
Section 16(a) of the Exchange Act

Section
16(a) of the Securities Exchange Act of 1934 requires the Companys officers,
Trustees and persons who own more that 10% of the Common Shares of the Company
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission.  Officers, Trustees
and greater that 10% shareholders are required by regulation to furnish the
Company with copies of all Section 16(a) forms they file.  Based solely on review of the copies of such
forms furnished to the Company, or written representations that no Annual
Statements of Beneficial Ownership of Securities on Form 5 were required to be
filed, the Company believes that for the fiscal year ended December 31, 2000,
all Section 16(a) filing requirements applicable to its officers, Trustees and
greater than 10% shareholders were complied with.

Item 10. 
Executive Compensation

Since
its inception through July 31, 1998, the Company paid no compensation to any of
its executive officers. The following table sets forth the compensation paid
for the period from August 1, 1998 through December 31, 1998 and for the years
ended December 31, 1999 and 2000.



Name and Principal Position
  Year
  Salary (1)
  Securities
  UnderlyingOptionsDuane
  H. LundChief Executive Officer, Chief Financial 
  Officer and Secretary
  2000 
  1999 
  1998
  $180,000(2)
  $132,500(2)
  $18,750(2)
  666,667(6)
  80,000(7) 
  ---Mary S. Henschel
  President, RESoft, Inc.
  2000
  $100,000(3)
  ---Odeh A. Muhawesh 
  Chief Knowledge Officer, RESoft, Inc.
  2000
  $100,000(4)
  1,000,000(8)Robert F. Rice 
  President and Secretary (5)
  2000 
  1999 
  1998
  $80,000(5)
  $132,500(5)
  $62,500(5)
  ---
  80,000(7)
  7,917(9)(1)      No bonuses were paid for the years ended
December 31, 2000, 1999 and 1998.

(2)      Amount represents a base annual salary of
$200,000 for the period from February 25, 2000 through December 31, 2000,
$80,000 for the period from October 1, 1999 through February 24, 2000, and
$150,000 for the period from November 16, 1998 through September 30, 1999.

(3)      Amount represents a base annual salary of
$120,000 for the period from February 25, 2000 through December 31, 2000.

(4)      Amount represents a base annual salary of
$120,000 for the period from February 25, 2000 through December 31, 2000.

(5)      Amount represents a base annual salary of
$80,000 for the period from October 1, 1999 through June 30, 2000 and $150,000
for the period from July 31, 1998 through September 30, 1999. Amount for 2000
also includes a $40,000 severance payment. 
Mr. Rice served as President of the Company for the period from November
16, 1998 through February 24, 2000.  He
also served as Secretary for the Company for the period from November 16, 1998
through June 30, 2000.

(6)      All options were granted in February 2000
and bear an exercise price of $6.375 per Common Share.  These options are exercisable as to 333,333
shares immediately, with options as to 41,667 shares exercisable quarterly,
commencing on May 24, 2000.

(7)All options were granted in October 1999
in accordance with the Company's plan in effect at that date and bear an
exercise price of $2.90 per Common Share, a price equal to 110% of the average
closing bid price for the Company's Common Shares over the 10 days preceding
the effective date of the registration statement covering the Class A Preferred
Shares. These options were exercisable as to 40,000 shares on December 31, 1999
and 40,000 shares on December 31, 2000.

(8)      All options were granted in February 2000
and bear an exercise price of $5.375 per Common Share. These options are
exercisable as to 500,000 shares immediately, with options as to 62,500 shares
exercisable quarterly, commencing on May 24, 2000.

(9)      Options reported were granted on May 27,
1998 under the Company's plan in effect at that date and bear an exercise price
of $5.37 per Common Share.

OPTIONS/SAR GRANTS IN
LAST FISCAL YEAR

Name and Principal
  Position
  Number of
  Securities Underlying Options Granted
  Percentage of Total
  Options Granted to Employees in Fiscal Year
  Exercise Price
  Expiration DateDuane H. Lund
  Chief Executive Officer and Chief Financial Officer and Secretary (1)
  666,667
  40.00%
  $6.375
  2/2010(1)Odeh A. Muhawesh 
  Chief Knowledge Officer, RESoft, Inc. (2)
  1,000,000
  60.00%
  $5.375
  2/2010(2)(1)
  All options were granted in February 2000
  and bear an exercise price of $6.375 per Common Share. These options are
  exercisable as to 333,333 shares immediately, with options as to 41,667
  shares exercisable quarterly, commencing on May 24, 2000.(2)
  All options were granted in February 2000
  and bear an exercise price of $5.375 per Common Share.  These options are exercisable as to
  500,000 shares immediately, with options as to 62,500 shares exercisable
  quarterly, commencing on May 24, 2000.AGGREGATED OPTION/SAR
EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION/SAR VALUES

Name and Principal
  Position
  Common Shares
  Acquired on Exercise
  Value Realized
  # of Unexercised
  Securities Underlying Options/SARs at Fiscal Year End Exercisable/
  Unexercisable
  Value of
  Unexercised in-the-money Options/SARs at Fiscal Year End ($)Exercisable/ UnexercisableDuane
  H. LundChief Executive Officer and Chief Financial Officer and
  Secretary
  ---
  ---
  746,667/538,334/208,333
  $0/$0/$0
  (1)Odeh A. Muhawesh
  Chief Knowledge Officer, RESoft, Inc.
  ---
  ---
  1,000,000/687,500/312,500
  $0/$0/$0
  (1)(1)      Calculations are based upon the closing
bid price of $1.625 per share as of December 31, 2000.

Employment Agreements

The
Company has employment agreements with Duane Lund, the Chief Executive Officer
of RESoft, Mary Henschel, the President of RESoft, and Odeh Muhawesh, the Chief
Knowledge Officer of RESoft, dated February 23, 2000. The employment agreements
provide for an initial base salary of $120,000 and a discretionary performance
bonus. Additionally, each executive receives those health, life and disability
and other benefits extended by the Board to other similarly situated
executives. The employment agreements expire on March 31, 2002. In the event
that the Company terminates the executives employment without cause or
following a change of control of the Company, the Company or, in the case of
change of control, its successor, will be obligated to pay the executives base
salary and benefits for a two-year period.

In
addition, the Company had an employment agreement with Duane Lund, the
Companys Chief Executive Officer, dated October 1, 1999.  The employment agreement provided for an
initial base salary of $80,000 and, if the Company achieved progressive annual
targets of earnings per share, the Board of Trustees may have elected to award
Mr. Lund a bonus of up to 100% of base salary. 
In addition, the employment agreement provided that Mr. Lund should
receive those health, life and disability and other benefits extended by the
Board of Trustees to other similarly situated executives.  The employment agreement expired on December
31, 2000.  No bonus was paid to Mr. Lund
under the employment agreement and he continues to serve as the Companys Chief
Executive Officer without an employment contract but at the salary utilized
under the previous agreement.

From October 1, 1999 until February 24,
2000, Robert Rice was employed with the Company as President of the Company
under an employment agreement on terms identical to those for
Mr. Lund.  Thereafter, Mr. Rice
continued as secretary of the Company. On June 30, 2000, pursuant to a
separation agreement, Mr. Rice resigned as the secretary and a Trustee of the
Company, received a $40,000 severance payment, and retained rights to exercise
87,917 stock options until December 31, 2005 at $2.90 per share granted
pursuant to an Option Agreement in October of 1999.

Committees of the
Board of Trustees

Audit Committee

The
Audit Committee currently consists of Messrs. Lund, Whiting and Salmen and held
four meetings during the year ended December 31, 2000.  The Committee reviews related party
transactions, makes recommendations concerning the engagement of independent
public accountants, reviews the performance of independent public accountants,
considers the range of audit and non–audit fees and reviews the adequacy
of the Company's internal accounting controls.

In September of 2000, the Board of Trustees
of the Company adopted a formal written Audit Committee Charter specifying the
scope of the Audit Committee's responsibilities, requiring the independent
directors of the Audit Committee to meet certain eligibility standards, and
otherwise complying with the newly adopted requirements of Securities and Exchange
Commission and the American Stock Exchange. The Company will be including a
copy its Audit Committee Charter and a report of the Audit Committee
recommending to the Board that the Company's financial statements for the year
ended December 31, 2000 be included in this annual report in its next proxy
statement.

Compensation Committee

The
Companys Compensation Committee currently consists of Messrs. Hoyt, Whiting
and Lambert and held two meetings during the year ended December 31, 2000.  The Compensation Committee makes
recommendations and exercises all powers of the Board of Directors in
connection with certain compensation matters, including incentive compensation
and benefit plans.  The Compensation
Committee administers, and has authority to grant awards under, the Company's
1998 Stock Incentive Plan.

Meetings of Trustees

The
Trustees held six meetings in 2000.

Compensation of Trustees

None.

Item 11.  Security Ownership of Certain Beneficial
Owners and Management

The
following table sets forth certain information with respect to the beneficial
ownership of the Company's Voting Shares as of March 1, 2001 by: (i) each
person known by the Company to own more than 5% in interest of the outstanding
Voting Shares: (ii) each of the Company's Trustees;  (iii) each of the Company's executive officers included in the
Summary Compensation Table included elsewhere herein; and (iv) all of the
Company's Trustees and executive officers as a group. Except as otherwise
noted, the person or entity named has sole voting and investment power over the
shares indicated.  Information as to the
beneficial ownership of Common Stock and Series A Preferred Shares by trustees
and executive officers has been furnished by the respective person.



NAME
  BENEFICIAL
  OWNERSHIPNumber (1)
  Percent (1)Steven B. Hoyt (2) (3)
  1,687,853
  24.8%Paul
  T. Lambert (2) (4)
  1,186,680
  17.4%Duane H. Lund (2) (5)
  1,450,113
  21.3%American Real Estate Equities, LLC (6)
  964,803
  14.2%Lambert Equities II, LLC (7)
  1,071,292
  15.7%WLPT Funding, LLC (8)
  1,446,665
  21.3%Mark S. Whiting (2)
  10,000
  *Robert D. Salmen (2)
  --
  --Odeh Muhawesh (2) (9)
  477,501
  7.0%Mary S. Henschel (2)
  138,011
  2.0%All trustees and current executive officers
  as a group
  (7 persons) (10)
  3,020,553
  44.4%*Indicates less than one percent.(1)      Based on 4,517,524 Common Shares and
663,291 Class A Preferred Shares outstanding as of March 1, 2001.

(2)      The business address for each of the
current trustees and executive officers is 4150 Olson Memorial Highway,
Minneapolis, Minnesota 55422.

(3)      Includes 413,760 Common Shares issuable
upon conversion of 120,000 Class A Preferred Shares, 964,803 Common Shares held
by American Real Estate Equities, LLC, of which Mr. Hoyt is a member.

(4)      Includes 106,489 Common Shares held by
Lambert Equities II, LLC, of which Mr. Lambert is the controlling majority
member and sole manager and 964,803 Common Shares held by American Real Estate
Equities, LLC, of which Lambert Equities II, LLC is a member.

(5)      Includes 481,862 Common Shares held by
WLPT Funding, LLC, of which Mr. Lund is the owner and sole manager, 964,803
Common Shares held by American Real Estate Equities, LLC, of which WLPT
Funding, LLC is a member. Excludes options as to 538,344 Common Shares which
are currently exercisable but not in the money.

(6)The business address for American Real
Estate Equities, LLC is 300 First Avenue North, Suite 115, Minneapolis, MN
55401.

(7)      Includes 964,803 Common Shares held by
American Real Estate Equities, LLC, of which Lambert Equities II, LLC is a member.
The business address for Lambert Equities II, LLC is 4155 East Jewel, Suite
103, Denver, Colorado 80222.

(8)      Includes 964,803 Common Shares held by
American Real Estate Equities, LLC, of which WLPT Funding, LLC is a member. The
business address for WLPT Funding, LLC is c/o Golden Acres Incorporated, 15315
Masons Pointe, Eden Prairie, Minnesota 55347.

(9)      Excludes options as to 687,500 Common
Shares which are currently exercisable but not in the money.

(10)    Includes 413,760 common shares issuable upon
conversion of 120,000 Class A Preferred Shares. Figures do not reflect an
aggregate of 2,565,483 common units of the Company's operating partnership and
options as to 1,225,884 Common Shares which are currently exercisable but not
in the money.

Item 12.  Certain Relationships
and Related Transactions

1999 Transactions

AREE.  AREE is owned in equal thirds by WLPT
Funding, LLC, Lambert Equities II, LLC and Steven B. Hoyt. Duane Lund, Chief
Executive Officer of the Company and a Trustee of the Company, owns 100% of
WLPT Funding and is its sole manager. Paul T. Lambert, one of the Company's
Trustees, is a majority owner and sole manager of Lambert Equities. Steven Hoyt
is also one of the Trustees of the Company.

In
November 1998, the Shareholders approved a transaction whereby AREE would
purchase 166,666 of the Companys Common Shares for $1,000,000, or $6.00 per
share, and would contribute certain assets, principally the Cold Springs office
center in St. Cloud, Minnesota and contracts for the purchase of 29 other real
estate investment properties (some of which Mr. Hoyt had an ownership interest
in), to the Operating Partnership.  As
consideration for such assets, the Company agreed to:

-
  Hire Mr. Lund as Chief Executive Officer of
  the Company and nominate Mr. Lambert and Mr. Hoyt for election to the Board
  of Trustees;-
  Issue 4,933,233 common units of the
  Operating Partnership to AREE or its members;-
  Issue an additional 9,934,663 common units
  of the Operating Partnership to the owners of the properties to be acquired
  (including 4,510,671 units to Mr. Hoyt and his affiliates);-
  Assume $64.0 million in third-party
  mortgage indebtedness on the properties to be acquired;-
  Pay $31.2 million in cash to the owners of
  the properties to be acquired (none of which was to be paid to Mr. Hoyt);-
  Issue to AREE a warrant to purchase 791,667
  Common Shares at a price of $5.37 per share with respect to 395,833 shares,
  $6.47 with respect to 197,917 shares, $7.74 per share with respect to 118,750
  shares and $9.32 per share with respect to a price of $5.37 per share with
  respect to 395,833 shares, and $6.47 with respect to 197,917 shares; and-
  Reimburse certain of AREE's costs,
  including costs in obtaining the contractual rights contributed to the
  operating partnership, upon the completion of the transaction.Following
shareholder approval of the proposed arrangement in November 1998, the Company
and AREE consummated a much smaller transaction pursuant to which the Operating
Partnership acquired only the Cold Springs office center and two other
investments properties in Minnesota. Under the final negotiated terms of the
smaller transaction, the Company:

-
  Issued 2,557,707 units of its Operating
  Partnership;-
  Assumed only $17.1 million in third-party
  mortgage indebtedness on the properties acquired;-
  Paid no cash to the owners of the
  properties acquired; and-
  Hired Mr. Lund as Chief Executive Officer
  and Mr. Lambert and Mr. Hoyt were elected to the Board of Trustees.

During the second quarter of 1999, theCompany
entered into further discussions with AREE because the original contemplated
transactions could not be consummated. As a result of these discussions:

-
  Mr. Lund remained Chief Executive Officer
  and Mr. Lambert and Mr. Hoyt remained on Board of Trustees;-
  The recipients of the Operating Partnership
  units returned 838,372 units to the Company for cancellation; of the
  1,719,335 Operating Partnership units still outstanding after the
  cancellation, 1,214,086 units are ordinary common units and 505,249 are Class
  B common units, which have no direct economic value, but which will convert
  to ordinary common units upon the determination of the Board that the
  Company's funds from operations equal or exceed $0.55 per share, assuming the
  exercise of all outstanding rights to purchase the Company's equity
  securities and conversion of all securities convertible into Common Shares;-
  Only 1,719,335 Operating Partnership units
  remain outstanding with the owners of the three properties acquired
  (including only 860,107 units to Mr. Hoyt and his affiliates);-
  AREE returned the warrant covering 791,667
  Common Shares to the Company for cancellation; and-
  The Company paid no cash to AREE in
  reimbursement of the $1,356,000 it spent in connection with the transaction;
  instead, it issued AREE, in the third quarter of 1999, 135,600 of its Class B
  Preferred Shares, all of which the Company has the right to redeem for $1 if
  it does not have total assets in excess of $150,000,000 or has not achieved
  funds from operations equal to at least $0.55 per share (on a fully-diluted
  basis) prior to June 30, 2002.Apart
from the foregoing transactions, AREE advanced the Company an aggregate of
$1,392,000 during the summer and fall of 1998 for working capital purposes.
Pursuant to the agreement with AREE, the Company has issued 119,200 Class B
Preferred Shares to it in discharge of $1,192,000 of the repayment obligation.

Wellington Management
Corporation. Former Chairman of the Board, Arnold
Leas, is the President and Chief Executive Officer of WMC and owned, together
with certain members of his family and family trusts, approximately 40% of
Wellington Management or WMC's outstanding stock.  President, Robert Rice, was a Vice President and General Counsel
of WMC before joining the Company. Mr. Rice had no ownership interest in
WMC.  In connection with the
contemplated AREE transactions of November 1998 described above, the Company
also entered into a number of agreements with WMC pursuant to which:

-
  Mr. Rice would be appointed the President
  of the Company;-
  Wellington Management would contribute the
  office building housing the Company's Brookfield, Wisconsin offices in
  Brookfield, Wisconsin to the Operating Partnership in exchange for $2.5
  million in cash, the assumption of $7.3 million in mortgage indebtedness on
  the property, and 745,098 Operating Partnership units;-
  The Company would issue to WMC a warrant to
  purchase 791,667 Common Shares at a price of $5.37 per share with respect to
  395,833 shares, $6.47 with respect to 197,917 shares, $7.74 per share with
  respect to 118,750 shares and $9.32 per share with respect to 79,167 shares;-
  The Company would terminate its obligations
  to WMC under certain advisory fee arrangements in exchange for $1.6 million;
  and-
  The Company would enter into a property
  management agreement with Wellington Realty, Inc., a wholly owned subsidiary
  of WMC, whereby Wellington Realty would manage the day-to-day operations of
  the Company's existing apartment community properties in Wisconsin for a management
  fee equal to 5% of gross income from such properties.Subsequent
to November 1998, the Company and Wellington Management agreed that the
transfer of the Brookfield office building could not occur because the Company
was unable to arrange financing to provide the stipulated $2.5 million cash
payment on acceptable terms. In connection with the discussions described
previously, the Company entered into an agreement during the second quarter of
1999 with Wellington Management whereby:

-
  Mr. Rice remained the President of the
  Company;-
  WMC returned the warrant covering 791,667
  Common Shares for cancellation;-
  The advisory fee arrangement was
  terminated, but the Company agreed that WMC would retain cash payments
  received in 1998 totaling $550,000 and that the Company would issue, in the
  third quarter of 1999, 95,000 Class B Preferred Shares as consideration for
  the termination; and-
  The Company entered into the new property
  management agreement with Wellington Realty, Inc. on the terms contemplated
  by the original agreement.Upon consummation of the sale of the
Companys Maple Grove property in November 1999, the Company paid Wellington
Realty, Inc. a fee totaling $501,000 pursuant to a listing agreement signed in
January 1998.  The listing agreement was
terminated June 30, 2000 and no other fees were paid to Wellington Realty, Inc.
from sales of the Companys properties.

Additional advances
of working capital.In April 1999, the Operating Partnership
borrowed $50,000 from each of AREE and WMC for working capital purposes at an
interest rate of 10% per annum under term loans due December 31, 1999. The
loans were repaid in November 1999.

2000 Transactions

On
February 18, 2000, the Board of Trustees approved the conversion of 1,657,437
units of the Operating Partnershipinto 1,468,484 Common Shares and further
approved the conversion of the 254,800 Class B Preferred Shares held by AREE
into 808,482 Common Shares.

In
connection with the acquisition of RESoft on February 24, 2000, the Company
exchanged 914,292 Common Shares (valued at $4.375 per share or an aggregate of
$4.0 million) for all of the outstanding stock of RESoft.  Odeh Muhawesh and Mary Henschel, former
shareholders of NETLink, will or have received, either directly or indirectly a
significant portion of such consideration. In connection with the transaction,
Mr. Muhawesh was appointed President of the Company and was reappointed as
Chief Knowledge Officer of RESoft.  He
is also a Trustee of the Company.  Ms.
Henschel has been the President of RESoft since February 24, 2000.

On
February 29, 2000, the Company, through the Operating Partnership, acquired the
Plymouth Properties from Plymouth Partners II, LLC, of which Steven B. Hoyt, a
Trustee of the Company is the chief manager and co-owner.  The total purchase price was $6.7 million
and was funded through the issuance of an aggregate of 181,629 units in the
Operating Partnership (valued at $4.35 per Unit, or an aggregate value of
$790,000), the assumption of certain third-party debt totaling $4.5 million
secured by the Plymouth Properties and the balance paid in cash. On June 30,
2000, the Company transferred and sold to WMC the Companys 100% interest in
Lake Point and 8% equity interest in Highlander.  The interests were exchanged for 95,000 shares of the Companys
Class B Preferred Shares owned by WMC, including accrued distributions, and WMC
assumed the mortgage debt totaling approximately $2.7 million associated with
Lake Pointe.  Further in connection with
the dispositions, the listing agreement between the Company and WMCs
affiliate, WMC Realty, Inc., was terminated and no brokerage commission was
paid to WMCs affiliate.  Additionally,
Mr. Leas resigned, and Robert F. Rice, the Secretary and a Trustee of the
Company, entered into a Separation Agreement with the Company pursuant to which
he resigned as Secretary and Trustee of the Company and received from the
Company a severance payment of $40,000.

On
December 29, 2000, the Operating Partnership sold its membership interest in
WPT I, the owner of the Thresher Property, to the Buyers, in exchange for
$169,874 in cash, 522,416 shares of common stock of the Company and 61,898
units of WPT I, all of which will be cancelled, and the release of
approximately $6.6 million of debt. In connection with the sale, cash in the
amount of $805,000 securing a letter of credit granted by the Company in favor
of the mortgagee of the Thresher Property and the letter of credit will be
released. Additionally, the Company is released from its obligation to indemnify
one of the Buyers, Steven B. Hoyt, who is also a member of the Board of
Trustees of the Company, from amounts incurred by him under personal guaranties
related to the Thresher Property which remained in place after the original
purchase by WPT I.  WPT I originally
purchased the Thresher Property from the Buyers, one of which, Steven B. Hoyt,
is a Trustee of the Company.

Management Fees

On
June 30, 2000, the Company terminated its property management relationship with
WRI.

The
Company maintains a property management agreement with Hoyt Properties Inc.
(Hoyt), an entity controlled by a Trustee of the Company to serve as property
manager of the commercial properties owned by the Company.  In connection with the agreement, Hoyt
manages the day-to-day operations of the properties owned by the Company and
receives a management fee for this service. 
Management fees consisted of $196,000 to Hoyt and $138,000 to WRI for
the year ended December 31, 1999 and $241,000 to Hoyt and $14,000 to WRI for
the year ended December 31, 2000.

Transactions between
Companies Under Common Management

RESoft
has a customer relationship in which certain members of the Companys
management performed certain management responsibilities for the customer from
approximately January 1 through June 30, 2000. 
Revenues recognized from the February 24, 2000 acquisition date through
December 31, 2000 were approximately $353,000. 
As of December 31, 2000, accounts receivable from the customer was
approximately $114,000 and amounts due to the customer was approximately
$30,000.

Rental Income

During
the year ended December 31, 2000 and December 31, 1999, the Company recognized
revenue of approximately $23,000 and $23,000, respectively, on office space
leased to Hoyt.

Rental Expense

During
the year ended December 31, 2000, the Company relocated to office space leased
by Hoyt and recognized an expense of approximately $175,000.

Insurance

From
time to time, the Company has purchased insurance through another affiliate of
WMC, Wellington Insurance Services, Inc., which received a commission of those
sales equal to 15% of scheduled premiums. These commissions totaled
approximately $6,000 and $10,000 for the year ended December 31, 2000 and 1999,
respectively.

Item 13.  Exhibits and Reports
on Form 8–K

(a) Exhibits



Exhibit Number
  Exhibit Description2.1
  Amended and Restated Contribution Agreement
  between the Company, the Operating Partnership, AREE and other limited
  partnership Unit recipients dated as of August 31, 1998 (filed as Exhibit A
  with the Company's Schedule 14A on November 6, 1998 and incorporated herein
  by reference)2.2
  Agreement and Plan of Reorganization dated
  as of February 25, 2000, by and among the Company, NTLI Acquisition
  Corporation, a Delaware corporation, NETLink International, Inc., a Minnesota
  corporation and Odeh A. Muhawesh, Mary Henschel, Alan Schmidt, Ahmad Yassine,
  Patrick Archbold, Ann Wessels, Art Carruth, Patricia Hewitt, Thomas walker
  and Sherry Ajax (filed as Exhibit 2.2 with the Company's Form 8-K on March 17,
  2000 and incorporated herein by reference)2.3
  Contribution Agreement between Wellington
  Partners, L.P., the Company and Plymouth Partners II, LLC and other LP Unit
  Recipients dated as of February 29, 2000 (filed as Exhibit 2.3 with the
  Company's Form 8-K on March 17, 2000 and incorporated herein by reference)3.1
  Declaration of Trust (filed with the
  Company's Registration Statement on Form SB–2 (Commission File No. 33–82888C)
  and incorporated herein by reference)3.2
  Bylaws of the Company (filed with the
  Company's Registration Statement on Form SB–2 (Commission file No. 33–82888C)
  and incorporated herein by reference)3.3
  Articles of Amendment and Restatement of
  the Declaration of Trust (filed as Exhibit E with the Company's Schedule 14A
  on November 6, 1998 and incorporated herein by reference)10.1
  Agreement of Limited Partnership of the
  Operating Partnership dated as of August 31, 1998 (filed as Exhibit C with
  the Company's Schedule 14A on November 6, 1998 and incorporated herein by
  reference)10.2
  Contribution Agreement between the
  Operating Partnership and WMC dated as of August 31, 1998 (filed as Exhibit B
  with the Company's Schedule 14A on November 6, 1998 and incorporated herein
  by reference)10.3
  Master Registration Rights Agreement dated
  as of August 31, 1998 (filed as Exhibit E of Exhibit C with the Company's
  Schedule 14A on November 6, 1998 and incorporated herein by reference)10.4
  Promissory Note for $2,750,000 by Lake
  Pointe Apartment Homes, Inc. to Credit Suisse First Boston Mortgage Capital,
  LLC dated March 5, 1998 (filed with the Company's Current Report on Form 8–K
  on August 31, 1998 and incorporated herein by reference)10.5
  Mortgage, Assignment of Leases and Rents
  and Security Agreement by and between Lake Pointe Apartment Homes, Inc. to
  Credit Suisse First Boston Mortgage Capital, LLC dated March 5, 1998 (filed
  with the Company's Current Report on Form 8–K on August 31, 1998 and
  incorporated herein by reference)10.6
  Common Stock Purchase Warrant by the
  Company to Credit Suisse First Boston Mortgage Capital LLC, dated March 5,
  1998 (filed with the Company's Current Report on Form 8–K on August 31,
  1998 and incorporated herein by reference)10.7
  Registration Rights Agreement by and
  between the Company and Credit Suisse First Boston Mortgage Capital, LLC
  dated March 5, 1998 (filed with the Company's Current Report on Form 8–K
  on August 31, 1998 and incorporated herein by reference)10.8
  Purchase Agreement by and between Maple
  Grove Apartment Homes, Inc. and The Shelard Group, Inc., dated July 2, 1999
  (filed with the Company's Current Report on Form 8–K on November 23,
  1999 and incorporated herein by reference)10.9
  Stock Exchange Agreement between the
  Company and Wellington Management Corporation effective June 30, 2000 (filed
  with the Company's Current Report on Form 8–K on July 14, 2000 and
  incorporated herein by reference)10.10
  Warrant to Purchase Shares of Stock dated
  March 28, 2000 between the Company and Venture One Real Estate LLC (filed
  with the Company's Quarterly Report for the period ended June 30, 2000 on
  Form 10–QSB filed on August 14, 2000 and incorporated herein by
  reference)10.11
  Call Agreement dated March 28, 2000
  between the Company and Venture One Real Estate LLC (filed with the Company's
  Quarterly Report for the period ended June 30, 2000 on Form 10–QSB
  filed on August 14, 2000 and incorporated herein by reference)10.12
  Warrant to Purchase Shares of Stock dated
  June 22, 2000 between the Company and Venture One Real Estate LLC (filed with
  the Company's Quarterly Report for the period June 30, 2000 on Form 10–QSB
  filed on August 14, 2000 and incorporated herein by reference)10.13
  Exclusive Agency and Representation
  Agreement between RESoft, Inc. and Venture One Real Estate, LLC (filed with
  the Company's Quarterly Report for the period September 30, 2000 on Form 10–QSB
  filed on November 14, 2000 and incorporated herein by reference)10.14
  Membership Unit Purchase Agreement dated
  December 29, 2000, between the Company, Wellington Properties Investments,
  L.P., and Steven B. Hoyt, Bruce K. Hoyt, Donald Ringrose, and Richard
  Wolsfeld (filed with the Company's Current Report as Exhibit 10.1 on Form 8–K
  on January 16, 2001 and incorporated herein by reference)

Shareholders may obtain a copy of any
exhibit listed in Item 13(a) by writing to Duane H. Lund, Secretary of the
Company.  Reasonable expenses will be
charged for copies and postage.

(b) Reports on Form 8–K

During
the fourth quarter ended December 31, 2000 and through March 30, 2001, the
Company filed the following current reports on Form 8–K:

Item
4 in connection with the resignation of the Companys independent public
accountant PricewaterhouseCoopers LLP filed November 16, 2000.

Item
2 in connection with the disposition of the Companys Thresher Properties filed
January 16, 2001.

Item
5 in connection with the Companys legal proceeding with Odeh A. Muhawesh filed
January 16, 2001.

Item
4 in connection with the appointment of the Companys independent public
accountant Boulay, Heutmaker, Zibell & Co. P.L.L.P. filed February 8, 2001.

SIGNATURES

By:  /s/ Duane H. LundDuane
  H. Lund, Secretary
  
  Dated: 
  March 30, 2001KNOW
ALL PERSON BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Duane H. Lund, jointly and severally, his attorneys–in–fact,
each with the power of substitution, for him in any and all capacities, to sign
any amendments to this Report on Form 10–KSB and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorney–in–fact, or his substitute or substitutes,
may do or cause to be done by virtue hereof.

In
accordance with Section 13 or 15(d) of the Securities Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

STONEHAVEN REALTY TRUST



Signature
  Title
  Date/s/ Duane H. Lund
  Duane H. Lund
  Trustee and Chief Executive Officer
  (Principal Executive Officer)
  March 30, 2001/s/ Steven B. Hoyt
  Steven B. Hoyt
  Trustee
  March 30, 2001/s/ Paul T. LambertPaul T. Lambert
  Trustee
  March 30, 2001/s/ Odeh A. Muhawesh
  Odeh A. Muhawesh
  Trustee
  March 30, 2001/s/ Robert D. Salmen
  Robert D. Salmen
  Trustee
  March 30, 2001/s/ Mark S. Whiting
  Mark S. Whiting
  Trustee
  March 30, 2001

STONEHAVEN REALTY TRUST AND
SUBSIDIARIESINDEX TO CONSOLIDATED FINANCIAL STATEMENTS



Report
  of Independent AuditorsReport of Independent AccountantsConsolidated
  Balance Sheetas of December 31, 2000Consolidated Statements of Operationsfor the
  Years Ended December 31, 2000 and December  31, 1999Consolidated Statements of Shareholders Equityfor the
  Years Ended December 31, 2000 and December 31, 1999Consolidated Statements of Cash Flowsfor the
  Years Ended December 31, 2000 and December 31, 1999Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT AUDITORS

To
the Board of Trustees and Shareholders of
Stonehaven Realty Trust and Subsidiaries:

We
have audited the accompanying consolidated balance sheet of Stonehaven Realty
Trust and Subsidiaries as of December 31, 2000, and the related
consolidated statements of operations, changes in shareholders' equity, and
cash flows for the year then ended. 
These consolidated financial statements are the responsibility of the
Company's management.  Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.  The
financial statements of Stonehaven Realty Trust and Subsidiaries for the year
ended December 31, 1999, were audited by other auditors whose report dated
March 21, 2000, expressed an unqualified opinion on those statements.

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

In
our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Stonehaven Realty
Trust and Subsidiaries as of December 31, 2000, and the results of their
operations and their cash flows for the year then ended in conformity with
accounting principles generally accepted in the United States of America.



/s/
Boulay, Heutmaker, Zibell & Co. P.L.L.P.

Minneapolis,
Minnesota
February 22, 2001

REPORT OF INDEPENDENT ACCOUNTANTS

To
the Board of Trustees and Shareholders of
Stonehaven Realty Trust and Subsidiaries:

In
our opinion, the accompanying consolidated statements of operations, of
shareholders equity and of cash flows of Stonehaven Realty Trust and
Subsidiaries present fairly, in all material respects, the results of their
operations and their cash flows for the year ended December 31, 1999 in
conformity with accounting principles generally accepted in the United States
of America.  These financial statements
are the responsibility of the Companys management; our responsibility is to
express an opinion on these financial statements based on our audit.  We conducted our audit of these statements
in accordance with auditing standards generally accepted in the United States
of America, 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 audit provides a reasonable basis for our opinion.

/s/PricewaterhouseCoopers
LLP

Chicago,
IL
March 21, 2000

Stonehaven
Realty Trust and SubsidiariesConsolidated Balance Sheet
December 31, 2000

ASSETSInvestments in real estate:Land
  $3,989,948Buildings and
  improvements
  15,787,085Computer hardware,
  software and other fixed assets
  939,93420,716,967Accumulated depreciation
  and amortization
  (992,762)Net investments in real
  estate
  19,724,205Cash and cash equivalents
  1,635,916Accounts receivable, net
  473,514Restricted cash
  1,034,034Other assets, net
  2,033,688Goodwill, net
  3,242,690TOTAL ASSETS
  $28,144,047LIABILITIES AND
  SHAREHOLDERS EQUITYLiabilities:Mortgage loans and notes payable
  $13,914,873Related party note payable
  335,000Accounts payable and accrued expenses
  2,493,966Deferred revenue and security deposits
  150,324Dividends and distributions payable
  709,139Total liabilities
  17,603,302Minority interest
  in consolidated subsidiary
  66,325COMMITMENTS AND
  CONTINGENCIESShareholders'
  equity:Class A
  Preferred Shares - $0.01 par value, 10,000,000 authorized: 785,037 Class A
  cumulative convertible shares issued and 663,291outstanding, $10.00 per share
  liquidation preference
  6,633Common Shares - $0.01 par value,
  100,000,000 authorized;  4,517,524
  shares issued and outstanding
  45,176Additional paid-in capital
  25,595,216Accumulated deficit
  (15,132,836)Treasury stock, at cost
  (39,769)Total shareholders
  equity
  10,474,420TOTAL LIABILITIES AND SHAREHOLDERS EQUITY
  $28,144,047The accompanying notes are an integral part
of the consolidated financial statements.

Stonehaven Realty Trust and SubsidiariesConsolidated Statements of
Operations

For
  the Years Ended December 31,2000
  1999Revenues:Rental
  $3,189,791
  $5,260,268Tenant recoveries
  1,921,114
  1,530,277Professional services and
  sales of hardware and software
  2,632,825
  Interest and other
  372,334
  106,012Total revenues
  8,116,064
  6,896,557Expenses:Property, operating and maintenance
  1,017,904
  1,508,873Advertising and promotion
  221,550
  51,915Property taxes and
  insurance
  959,102
  1,157,772Depreciation and
  amortization
  2,582,297
  1,210,404Interest
  1,790,804
  2,556,624General and
  administrative
  2,969,153
  801,032Management fees
  255,422
  333,987Costs related to
  professional services and sales of hardware and software
  2,143,524
  Software development
  396,181
  Termination of advisory
  agreement
  
  950,000Nonrecurring expenses
  408,415
  2,613,383Total
  expenses
  12,744,352
  11,183,990Loss from operations before equity in
  income of unconsolidated subsidiary and loss allocated to minority interest
  (4,628,288)
  (4,287,433)Equity in income of unconsolidated
  subsidiary
  2,912
  10,269Loss allocated to minority interest
  571,333
  2,721,695Loss from operations
  (4,054,043)
  (1,555,469)Gain (loss) on sale of investments in real
  estate
  (4,260,910)
  686,716Loss before extraordinary loss and
  cumulative effect of change in accounting principle
  (8,314,953)
  (868,753)Extraordinary loss
  
  (482,272)Cumulative effect of change in accounting
  principle
  
  (35,565)Net loss
  (8,314,953)
  (1,386,590)Preferred Share dividends
  (643,558)
  Net loss available to Common Shareholders
  $(8,958,511)
  $(1,386,590)Net loss available to Common Shareholders
  before extraordinary loss and cumulative effect of change in accounting
  principle per Common Share: Basic and Diluted
  $(2.01)
  $(0.64)Net loss available to Common Shareholders
  per Common Share: Basic and Diluted
  $(2.01)
  $(1.02)Weighted average number of Common Shares
  outstanding
  4,459,656
  1,361,309The accompanying notes are an integral part
of the consolidated financial statements.

Stonehaven Realty Trust and
SubsidiariesConsolidated Statements of
Shareholders' Equity
For the Years Ended December 31, 2000
and 1999

Class A Preferred
   Shares
  Class B Preferred
  Shares
  Common
  Shares
  Common Share Warrants
  Additional Paid-in Capital
  Accumulated Deficit
  Treasury
  Stock
  TotalBalance at December 31, 1998
  $
  $
  $13,392
  $1,510,000
  $7,497,426
  $(4,263,017)
  $3⁄4
  $4,757,801Cash dividends declared
  
  
  
  
  
  (601,017)
  3⁄4
  (601,017)Common Shares issued in connection with
  dividend reinvestment
  
  
  455
  
  200,629
  3⁄4
  3⁄4
  201,084Issuance of Preferred Shares
  7,850
  3,498
  
  3⁄4
  10,247,955
  3⁄4
  3⁄4
  10,259,303Retirement of warrants
  
  
  
  (1,510,000)
  1,510,000
  3⁄4
  3⁄4
  3⁄4Conversion of Preferred Shares to Common
  Shares
  (10)
  3⁄4
  34
  3⁄4
  (24)
  3⁄4
  3⁄4
  3⁄4Adjustment to minority interest resulting
  from changes in ownership of the Operating Partnership by the Company
  3⁄4
  3⁄4
  3⁄4
  3⁄4
  1,308,891
  3⁄4
  3⁄4
  1,308,891Net loss
  3⁄4
  3⁄4
  3⁄4
  3⁄4
  3⁄4
  (1,386,590)
  3⁄4
  (1,386,590)Balance at December 31, 1999
  $7,840
  $3,498
  $13,881
  $
  $20,764,877
  $(6,250,624)
  $3⁄4
  $14,539,472Class A Preferred Shares
  Class B Preferred Shares
  Common Shares
  Common Share Warrants
  Additional Paid-in Capital
  Accumulated Deficit
  Treasury Stock
  TotalBalance at December 31, 1999
  $7,840
  $3,498
  $13,881
  $
  $20,764,877
  $(6,250,624)
  $3⁄4
  $14,539,472Cash dividends declared
  
  
  
  
  
  (643,558)
  3⁄4
  (643,558)Common Shares issued in connection with
  dividend reinvestments
  
  
  167
  
  47,498
  3⁄4
  3⁄4
  47,665Common Shares issued in connection with
  RESoft acquisition.
  
  
  9,143
  
  3,990,857
  
  
  4,000,000Issuance of Common Shares for services
  
  
  429
  3⁄4
  149,571
  3⁄4
  3⁄4
  150,000Issuance of warrants
  
  
  
  
  682,338
  3⁄4
  3⁄4
  682,338Cost of 15,300 Common Shares acquired for
  treasury
  
  3⁄4
  (153)
  3⁄4
  153
  3⁄4
  (39,769)
  (39,769)Lake Pointe return of capital and sale
  
  (950)
  
  
  (760,646)
  (45,000)
  
  (806,596)Thresher Property return of capital and
  sale
  
  
  (5,224)
  
  (7,120,036)
  
  3⁄4
  (7,125,260)Conversion of Preferred Shares and units to
  Common Shares
  (1,207)
  (2,548)
  26,933
  
  (23,178)
  
  
  Adjustments to minority interest resulting
  from operations and changes in ownership of the operating partnership by the
  Company
  
  
  
  
  7,863,782
  121,299
  
  7,985,081Net loss
  
  
  
  
  
  (8,314,953)
  
  (8,314,953)Balance at December 31, 2000
  $6,633
  $
  $45,176
  $
  $25,595,216
  $(15,132,836)
  $(39,769)
  $10,474,420The accompanying notes are an integral part
of the consolidated financial statements.

Stonehaven
Realty Trust and SubsidiariesConsolidated Statements of Cash
Flows

For the Years Ended
  December 31,2000
  1999Cash flows from operating activities:Net loss
  $(8,314,953)
  $(1,386,590)Adjustments to reconcile
  net loss to net cash  used in
  operating activities:Depreciation
  and amortization
  2,582,297
  1,210,404Loss
  allocated to minority interest
  (571,333)
  (2,721,695)Loss
  (gain) on sales of investments in real estate
  4,260,910
  (686,716)Extraordinary
  loss
  
  482,272Cumulative
  effect of change in accounting principles
  
  35,565Amortization
  of discount on marketable securities
  
  (34,351)Incentive
  advisory agreement termination fee paid through issuance of Class B Preferred
  Shares
  
  950,000Abandoned
  project pursuit costs paid through issuance of Class B Preferred Shares
  
  2,548,000Equity
  in income of unconsolidated subsidiary
  (2,912)
  (10,269)Net change in assets and
  liabilities:Accounts
  receivable, net
  (40,771)
  12,448Other
  assets, net
  8,543
  17,146Restricted
  cash
  (906,985)
  (45,368)Related
  party payable
  
  9,061Accounts
  payable and accrued expenses
  147,898
  (938,325)Deferred
  revenue and security deposits
  122,385
  (69,039)Net
  cash used in operating activities
  (2,714,921)
  (627,457)Cash flows from investing activities:Acquisitions of and additions
  to real estate properties
  (1,359,246)
  (119,021)Acquisitions of computer
  hardware, software and other fixed assets
  (902,172)
  Dispositions of real
  estate properties and investment in unconsolidated subsidiary, net
  170,999
  3,138,476Cash proceeds received
  from acquisition of consolidated subsidiary
  160,759
  Redemption (Purchase) of
  marketable securities
  5,188,779
  (5,153,504)Investment in
  unconsolidated subsidiary
  7,425
  (90,000)Deferred costs
  
  (24,200)Net
  cash provided by (used in) investing activities
  $3,266,544
  $(2,248,249)For the Years Ended
  December 31,2000
  1999Cash flows from financing activities:Payments of mortgage
  loans and notes payable
  $(536,614)
  $(584,459)Payment on line of credit
  (68,466)
  (200,000)Payment of related
  party note payable
  (415,000)
  Purchase of treasury
  shares
  (39,769)
  Gross proceeds from
  issuance of Preferred Shares
  
  7,850,370Gross proceeds from
  issuance of Common Shares
  
  15,411Costs associated with
  issuance of Preferred Shares
  
  (1,089,067)Dividends and
  distributions paid, net
  (748,582)
  (377,726)Net
  cash (used in) provided by financing activities
  (1,808,431)
  5,614,529Net (decrease) increase in cash and cash
  equivalents
  (1,256,808)
  2,738,823Cash and cash equivalentsBeginning of year
  2,892,724
  153,901End of year
  $1,635,916
  $2,892,724The accompanying notes are an integral part
of the consolidated financial statements.

Stonehaven Realty Trust and SubsidiariesNotes to Consolidated
Financial Statements

1.Organization

Stonehaven Realty
Trust("Company") is
a real estate and technology company separated into two business segments: a
commercial real estate segment which acquires, owns and operates commercial
real estate and a technology segment which provides information technology
consulting and document management solutions.

The
Company is a self-administered real estate investment trust (REIT) formed on
March 15, 1994 under Maryland law.  In
November 1998, the Company became an umbrella partnership REIT and formed an
operating partnership, Wellington Properties Investments, L.P. (Operating
Partnership), of which the Company is the sole general partner and owns an
approximate 92.9% interest.  Through the
Operating Partnership and certain wholly owned subsidiaries, the Company
acquires, owns and operates commercial real estate investment properties.

As
of December 31, 2000, the Company owned the following five commercial real
estate properties:

         A
26,186 square-foot light industrial facility in Plymouth, Minnesota,
         A 26,186 square-foot light
industrial facility in Plymouth, Minnesota,
         A 26,186 square-foot light
industrial facility in Plymouth, Minnesota,
         A 77,533 square-foot office building
in St. Cloud, Minnesota, and
         A 50,291 square-foot light
industrial facility in Burnsville, MinnesotaOn
February 24, 2000, the Company acquired RESoft, Inc., (formerly NETLink
International, Inc.) (RESoft) a privately held Minnesota corporation, to provide information technology consulting and
document management solutions to real estate owners and managers, law
firms and major corporations.

2.Basis of Presentation

The
Company is the sole general partner of the Operating Partnership, with an approximate
92.9% interest at December 31, 2000. 
Minority interest at December 31, 2000 represents approximately a 7.1%
aggregate partnership interest in the Operating Partnership held by the limited
partners thereof.

The
consolidated financial statements of the Company at December 31, 2000 and for
the years ended December 31, 2000 and 1999 include the accounts and operating
results of the Company, its subsidiaries and the Operating Partnership as the
Companys general partnership interest provides for control over all
significant Operating Partnership activities. 
The consolidated financial statements include the Companys 8% equity
interest in Highlander Acquisition Company, LLC (Highlander) under the equity
method of accounting for the periods the Company retained its equity
interests.  All significant intercompany
transactions have been eliminated in consolidation.

3.  Summary of
Significant Accounting Policies

Use of Estimates in
the Preparation of Financial Statements

In
order to conform with generally accepted accounting principles, management, in
preparation of the Companys consolidated financial statements, is required to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of December
31, 2000, and the reported amounts of revenues and expenses for the years ended
December 31, 2000 and 1999.  Actual
results could differ from those estimates.

Investments in Real
Estate and Depreciation

Real
estate assets are carried at the lower of cost or estimated net realizable
value.  The Company periodically reviews
its properties for impairment and provides for a provision if impairments are
determined.  First, to determine if
impairment may exist, the Company reviews its properties and identifies those,
if any, which have had either an event of change or event of circumstances
warranting further assessment of recoverability.  Then, the Company estimates the fair value of those properties on
an individual basis by capitalizing the expected net operating income, among
various other factors.  Such amounts are
then compared to the propertys depreciated cost to determine whether an
impairment exists.  The Company has not
recognized impairment losses on real estate assets to date.

Depreciation
expense is computed using the straight-line method based on the following
useful lives:

YearsBuildings and improvements
  40Computer hardware, software and other fixed
  assets
  3-5

Expenditures
for ordinary maintenance and repairs are expensed to operations as incurred and
significant renovations and improvements that improve or extend the useful life
of the asset are capitalized and depreciated over their estimated useful life.

When
a property is sold or retired, the costs and related accumulated depreciation
are removed from the accounts and the resulting gain or loss is reflected in
the statement of operations.

Cash and cash
equivalents

Cash
and cash equivalents include all investments purchased with an original
maturity date of three months or less. 
The carrying amount approximates fair value due to short maturity of
these investments.

The
Company maintains its cash and cash equivalents primarily at two financial
institutions. At times throughout the year, the Companys cash and cash
equivalent balances may exceed amounts insured by the Federal Deposit Insurance
Corporation. Cash in money market funds is not Federally insured. As of
December 31, 2000, such investments were $599,000.

Accounts Receivable

Accounts
receivable is reported net of allowance for doubtful accounts of approximately
$160,000 as of December 31, 2000.

Other Assets

Other
assets primarily consist of nonrefundable prepaid minimum software royalties,
the value of a proprietary database and deferred financing costs incurred to
obtain and secure mortgage debt financing. 
The nonrefundable prepaid minimum software royalties and the valuation
of the proprietary databases are being amortized over the life of the contracts
on a straight-line basis.  The deferred
financing costs are being amortized over the life of the respective loans on a
straight-line basis.  Accumulated
amortization as of December 31, 2000 was $1.6 million.

Goodwill

Goodwill
incurred in connection with the acquisition of RESoft is amortized on a
straight-line basis over an estimated useful life of three years. Accumulated
amortization as of December 31, 2000 was $1.3 million.

Revenue Recognition

Rental
revenue from tenants is recognized on a straight-line basis over the term of
the lease agreements regardless of when payments are due.  Tenant recoveries include payments from
commercial property tenants for reimbursement of the tenants share of real
estate taxes and certain common area maintenance costs.  Such costs are recognized as revenue in the
period the costs are incurred.

Revenue
generated from professional services and sales of hardware and software is
recognized as services and goods are provided. 
Services billed in advance are recorded as deferred revenue and
recognized when revenue is earned.

Software Development

Costs
related to development of the Companys new software product are charged to
software development expense as incurred. 
Software development costs are capitalized beginning when a products
technological feasibility has been established, which to date has been when the
Company has a working model of the software, and ending, when a product is
available for general release to customers. 
Substantially all development costs are incurred prior to establishing a
working model.  As a result, the Company
has not capitalized any software development costs since such costs have not
been significant.

Income Taxes

The Company has
historically operated as a REIT and maintained its qualification as a REIT
under Sections 856 through 860 of the Internal Revenue Code ("Code").
As a REIT, the Company generally was not subject to federal income tax. To
qualify as a REIT under the Code for a taxable year, the Company must meet
certain requirements relating to its assets, income, stock ownership and distributions
to shareholders. For the year ended December 31, 2000, the Company did not
qualify as a REIT under the Code due to RESofts operations.  Due to the Companys failure to qualify as a
REIT, the Company is now subject to federal income tax on all of its taxable
income at regular corporate rates and will not receive a deduction for
dividends paid to its shareholders. Additionally, any distributions to
shareholders generally will be taxable to the shareholders as ordinary income
to the extent of current and accumulated earnings and profits. Thus, the
Company's income would be subject to double taxationat the corporate level and the shareholder
level to the extent such income is distributed to shareholders. For the year
ended December 31, 2000, the Company was in a taxable loss position.Accordingly,
no provision has been made for federal income taxes in the accompanying
consolidated financial statements.

Failure to
qualify as a REIT for the year ended December 31, 2000 disqualifies the Company
from taxation as a REIT for the next four taxable years and could result in the
Company incurring indebtedness or liquidating investments should the Company
not have sufficient funds to pay the resulting federal income tax liabilities.
As a result, the funds available for distribution to the Company's shareholders
would be reduced for each of the years involved. In addition, dividend payments
subject to the Code would no longer be required.

Because the
Company is no longer a REIT for federal income tax purposes, the Company now
accounts for income taxes using the liability method under which deferred tax
assets and liabilities are determined based on differences between the
financial statement and tax bases of assets and liabilities using enacted tax
rates in effect for the period in which the differences are expected to affect
taxable income.  Valuation allowances
are established when necessary to reduce deferred tax assets to the amount
expected to be realized.

For
federal income tax purposes, all cash distributions paid to shareholders for
2000 and 1999 were characterized as return of capital.

Investment in
Unconsolidated Subsidiary

The
Company accounted for the investment in Highlander under the equity
method.  The investment was recorded
initially at the Companys cost and subsequently adjusted for the Companys net
equity in income or loss and cash contributions and distributions.

Fair Value of
Financial Instruments

The
Companys financial instruments include cash and cash equivalents, accounts
receivable, accounts payable and accrued liabilities and mortgage loans and
notes payable.  It is not currently
practicable to estimate the fair value of mortgage loans and notes payable
because those agreements contain unique terms, conditions, covenants and
restrictions, which were negotiated at arms length with the Companys
lenders.  There is no readily
determinable similar instrument on which to base an estimate of fair value for
those financial instruments.  For all
other financial instruments, the fair values of the financial instruments were
not materially different from their carrying or contract values.

Concentration of Risk

The
Company relies on software licensed from a third party, including software that
is integrated with internally developed software and used in the Companys
product.  The functionality of the
Companys product, therefore, depends on its ability to integrate this third
party software into its product.

Segment Reporting

In June 1997, the FASB issued Statement of
Financial Accounting Standards No. 131, Disclosure about Segments of an
Enterprise and Related Information. 
This statement requires that a public company report financial and
descriptive information about its reportable operating segments.  Generally, financial information is required
to be reported on the basis that it is used internally for evaluating segment
performance and deciding how to allocate resources to segments.  Management views the Company as two business segments: a commercial real estate
segment which acquires, owns and operates commercial real estate and a
technology segment which provides information technology consulting and
document management solutions.

Recent Accounting
Pronouncements

In
April 1998, the Accounting Standards Executive Committee of the American Institute
of Certified Public Accountants issued Statement of Position 98-5, Reporting
on the Costs of Start-Up Activities (SOP 98-5).  SOP 98-5 requires that the net unamortized balance of all start
up costs and organizational costs be written off as a cumulative effect of a
change in accounting principle and all future start-up costs and organizational
costs should be expensed.  In 1999, the
Company reported cumulative effect of a change in accounting principle in the
amount of $35,565 to reflect the write-off of the unamortized balance of
organizational costs.

In
June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, Accounting for Derivative
Instruments and Hedging Activities (FAS 133) FAS 133, as amended,
establishes methods of accounting for derivative financial instruments and
hedging activities related to those instruments as well as other hedging
activities.  The Company will be
required to adopt FAS 133 effective January 1, 2001.  Because the Company does not use derivative financial
instruments, the Company does not believe the impact of FAS 133 will be
material to the Companys consolidated financial position or results of
operations.

In
December 1999, the Securities and Exchange Commission (SEC) issued SEC Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements
(SAB 101).  SAB 101 provides guidance
on the recognition, presentation, and disclosure of revenue in financial
statements.  In October 2000, the SEC
issued a Frequently Asked Questions document on SAB 101 to provide further
definitive guidance on the implementation of SAB 101.  SAB 101 is effective for years beginning after December 15, 1999
and the Company was required to adopt SAB 101 in the quarter ended December 31,
2000 retroactive to the beginning of the year. 
SAB 101 did not have an effect on the Companys results of operations,
financial position or cash flows.

Reclassification

Certain
1999 amounts have been reclassified to conform to the 2000 presentation.

4.  Acquisitions
and Dispositions

Investment in
Unconsolidated Subsidiary

On
March 4, 1999, the Company acquired an 8% equity interest in Highlander at a
cost of $90,000.

Acquisition of
Investments in Real Estate and Consolidated Subsidiary

On
February 29, 2000, the Company through the Operating Partnership acquired
three commercial real estate properties located in suburban Minneapolis,
Minnesota ("Plymouth Properties"). The Plymouth Properties were
purchased from a related party for an aggregate purchase price of approximately
$6.7 million. The purchase price was funded through the issuance of an
aggregate of 181,629 limited partnership units ("Plymouth Units") in
the Operating Partnership (valued at $4.35 per Plymouth Unit, or an aggregate
value of approximately $790,000), the assumption of certain third-party debt
totaling approximately $4.5 million, secured by the Plymouth Properties, and
the balance paid in cash.   The
acquisition was accounted for using the purchase method of accounting.

On February 24, 2000, the Company
acquired RESoft.  The acquisition was
accomplished by exchanging 914,292 of the Company's Common Shares for all of
the issued and outstanding stock of RESoft valued at $4.375 per share, or an
aggregate value of approximately $4.0 million.  The acquisition was accounted for using the purchase method of
accounting.

Dispositions of
Investments in Real Estate

On
December 29, 2000, the Operating Partnership sold its membership interest in
its wholly-owned subsidiary WPT I, LLC, a Delaware limited liability company
("WPT I") and owner of the Thresher Square property ("Thresher
Property"), to four individuals ("Buyers"), in exchange for
$169,874 in cash, 522,416 shares of Common Stock of the Company and 61,898
units of WPT I, all of which will be cancelled, and the release of
approximately $6.6 million of debt. In connection with the sale, cash in the
amount of $805,000 securing a letter of credit granted by the Company in favor
of the mortgagee of the Thresher Property and the letter of credit will be
released. Additionally, the Company is released from its obligation to
indemnify one of the Buyers, who is also a member of the Board of Trustees of
the Company, from amounts incurred by him under personal guaranties related to
the Thresher Property which remained in place after the original purchase by
WPT I.  WPT I originally purchased the
Thresher Property from the Buyers, one of which is a Trustee of the Company.  The disposition resulted in no gain or loss
being recorded in the accompanying consolidated statement of operations due to
the related party nature of the transaction. 
The disposition was considered a return of capital and resulted in a
$7.1 million reduction in shareholders equity.

On June 30, 2000, the Companytransferred
and sold to Wellington Management Corporation ("WMC") the Company's
100% interest in Lake Pointe Apartment Homes, Inc., a Wisconsin
corporation and wholly owned subsidiary of the Company ("Lake
Pointe") and the Company's 8% equity interest in Highlander. The interests
were exchanged for 95,000 shares of the Company's Class B Junior
Cumulative Convertible Preferred Shares (Class B Preferred Shares) owned by
WMC and WMC assumed the mortgage debt totaling approximately $2.7 million
associated with Lake Pointe. The disposition resulted in no gain or loss being
recorded in the accompanying consolidated statement of operations due to the
related party nature of the transaction. 
The disposition was considered a return of capital and resulted in a $807,000
reduction in shareholders equity.

On
November 16, 1999, the Company disposed of the Maple Grove Apartments, a
304-unit apartment community in Madison, Wisconsin.  Sale consideration totaled $16.7 million, which included the
assumption of approximately $12.6 million of mortgage indebtedness.  The gain from the disposition of this
property totaled approximately $690,000.

Pro Forma
Consolidated Financial Statements (Unaudited)

The
following unaudited pro forma condensed consolidated financial information
presented below is as if the acquisitions of the Plymouth Properties and RESoft
and the dispositions of Maple Grove, Lake Pointe, Highlander and the Thresher
Property had occurred on January 1, 1999. 
The unaudited pro forma financial information is not necessarily
indicative of the results, which actually would have occurred if the
acquisitions or dispositions had been consummated on January 1, 1999, nor does
the unaudited pro forma information purport to represent the results of
operations for future periods.

For the Years Ended December 31,2000
  1999Pro forma total revenues
  $6,574,136
  $7,934,992Pro forma loss available to Common Shareholders
  $8,559,109
  $1,716,252Pro forma loss per Common Share- Basic and Diluted
  $2.10
  $0.995.  Mortgage
Loans and Notes Payable

Mortgage
loans and note payable as of December 31, 2000 consisted of the following:

Amount
  Payment TermsCentury Bank, N.A., 7.625%, maturing on May
  31, 2002, collateralized by the Plymouth I property and assignment of rents*
  $1,494,414
  Monthly principal and interest of $12,501Century Bank, N.A., 7.625%, maturing on May
  31, 2002, collateralized by the Plymouth II and III properties and assignment
  of rents*
  2,835,951
  Monthly principal and interest of $21,686GMAC Commercial Mortgage Corporation,
  7.00%, maturing February 1, 2008, collateralized by the Nicollet commercial
  property and an assignment of rents and security agreement
  2,277,792
  Monthly principal and interest of $15,635Bremer Bank, NA, variable rate (effective
  rate of 10.5% as of December 31, 2000), matured September 30, 2000, month to
  month payments subsequent to October 1, 2000, collateralized by the Cold
  Springs commercial property
  5,431,716
  Monthly principal and interest of $51,518Bremer Business Financial Corp, variable
  rate (effective rate of 12.5% as of December 31, 2000), maturing September
  30, 2000, month to month payments subsequent to October 1, 2000,
  collateralized by the Cold Springs commercial property
  1,875,000
  Monthly interest at a variable interest
  rate$13,914,873*        A Trustee of the Company and his spouse
has fully guaranteed this mortgage loan.

The mortgage loans and notes payable
mature as follows:

Year ending December 31,2001
  $7,415,2462002
  4,282,1192003
  33,4502004
  35,8682005
  38,460Thereafter
  2,109,730$13,914,873

The
Company has a note payable to the former Chief Executive Officer of RESoft, who
is the current Chief Knowledge Officer of RESoft and a Trustee of the
Company.  The note totaled $335,000 as
of December 31, 2000 and was due on January 2, 2001.  On December 29, 2000, the Company notified the Chief Knowledge
Officer that it was suspending its payment under the promissory note assumed by
RESoft pending the resolution of the currently outstanding legal
proceeding.  The note accrues interest
at the prime rate (9.50% as of December 31, 2000) and payment may be made in
cash or Common Shares of the Company, at the option of the Company.

In
connection with the acquisition of RESoft, the Company assumed a bank line of
credit.  Subsequent to the acquisition,
the Company repaid amounts outstanding under the line of credit and terminated
the agreement.

6.  Shares, Warrants and Options

Stock Split

On
March 16, 1999, the Companys Board of Trustees declared a stock split of 4.75
Common Shares for each 3.00 Common Shares, effective on March 24, 1999 to
shareholders of record as of March 22, 1999 (Stock Split).  The Operating Partnership simultaneously
declared a split of 4.75 Units for each 3.00 Units effective on March 24, 1999
to holders of Units of record as of March 22, 1999.  All amounts herein have been adjusted to give effect to the Stock
Split.

Share issuances,
redemptions, repurchases and conversions

On
November 20, 1998, the Company issued 2,557,707 Units in the Operating
Partnership in connection with the acquisition of three commercial
properties.  The Units are exchangeable
into Common Shares, subject to certain conditions.  Effective June 30, 1999, 838,372 of these Units were returned to
the Company and cancelled.

On
August 12, 1999, the Company issued 254,800 Class B Preferred Shares to
American Real Estate Equities, LLC, a related party, (AREE) as consideration
for payment of advances to the Company for working capital purposes, costs
incurred in connection with the Companys 1998 commercial acquisitions and
payments for abandoned project pursuit costs. 
Further, on August 12, 1999, the Company issued 95,000 Class B Preferred
Shares to WMC as partial consideration for the termination of the incentive
advisory agreement between the Company and WMC.

On October 28, 1999, the Company issued
700,000 Class A Cumulative Convertible Preferred Shares (Class A Preferred
Shares) to the public (Preferred Offering). Each of the Class A Preferred
Shares is entitled, at all meetings of shareholders, to 3.448 votes,
the number of Common Shares into which they are convertible, subject to
adjustment for stock splits and similar events.  The Class A Preferred Shares are entitled to vote as a class on
certain matters that affect their respective rights.  The Class A Preferred Shares bear a liquidation value of $10.00
per share and accrue a dividend equal to $0.475 per share, with such dividend
payable every six months.  The Class A
Preferred Shares are convertible into the number of Common Shares equal to the
quotient obtained by dividing (1) $10.00 plus any dividends then accrued but
unpaid on the Class A Preferred Shares, by (2) $2.90, a price equal to 110% of
the average closing bid price of Common Shares over the 10 trading days preceding
the effective date of the registration statement covering the Class A Preferred
Shares.  The Company has the right to
redeem the Class A Preferred Shares, under certain circumstances, after the
two-year anniversary date of the initial closing of the Preferred
Offering.  Proceeds from the Preferred
Offering, net of underwriters discount and total offering expenses, were $6.0
million.

On
December 16, 1999, in connection with a 45-day option to purchase additional
Class A Preferred Shares solely to cover any over allotments of the Preferred
Offering, the Company issued 85,037 additional Class A Preferred Shares.  Proceeds from this sale of additional Class
A Preferred Shares, net of underwriters discount and total offering expenses,
were approximately $745,000.

On
February 18, 2000, the Board of Trustees approved the conversion of 1,657,437
Units of the Operating Partnership into 1,468,484 Common Shares and further
approved the conversion of the 254,800 Class B Preferred Shares held by AREE
into 808,482 Common Shares.

In
connection with the acquisition of RESoft, the Company issued 914,292 Common
Shares (valued at $4.375 per share or an aggregate of $4.0 million).

On
February 29, 2000, the Company through the Operating Partnership acquired
the Plymouth Properties. The Plymouth Properties were purchased from a related
party for an aggregate purchase price of approximately $6.7 million. The
purchase price was funded through the issuance of an aggregate of 181,629
Plymouth Units in the Operating Partnership (valued at $4.35 per Plymouth Unit,
or an aggregate value of approximately $790,000), the assumption of certain
third–party debt totaling approximately $4.5 million, secured by the
Plymouth Properties, and the balance paid in cash.

During the second quarter of 2000, the
Company issued to an individual contractor 42,857 Common Shares in exchange for
consulting services provided in connection with the acquisition by the Company
of the Plymouth Properties.  The shares
were valued at an aggregate price of $150,000 or $3.50 per share.  The Company has expensed the cost of the
consulting services during the year ended December 31, 2000.

On June 30,
2000, the Company transferred and sold to WMC the Company's 100% interest in
Lake Pointe and the Company's 8% equity interest in Highlander. The interests
were exchanged for 95,000 shares of the Company's Class B Preferred Shares
owned by WMC and WMC assumed the mortgage debt totaling approximately
$2.7 million associated with Lake Pointe.

On July 1, 2000, the Boardof Trustees
of the Company authorized the Company to repurchase, on a quarterly basis, up
to 150,000 Common Shares of the Company in open market transactions. To
facilitate such repurchase program, no dividend was declared on the Companys
Common Shares. During the year ended December 31, 2000, the Company repurchased
15,300 Common Shares at an aggregate cost of approximately $40,000.  As of December 31, 2000, the 15,300 Common
Shares represented all of the treasury stock as recorded in the accompanying
consolidated balance sheet.

On
December 29, 2000, the Operating Partnership sold its membership interest in
WPT I and owner of the Thresher Property to the Buyers in exchange for $169,874
in cash, 522,416 shares of common stock of the Company and 61,898 units of WPT
I, all of which will be cancelled, and the release of approximately $6.6
million of debt.  WPT I originally
purchased the Thresher Property from the Buyers, one of which is a Trustee of
Stonehaven.

During
the year ended December 31, 2000, 120,746 Class A Preferred Shares were
converted into 416,331 Common Shares.

Dividend Reinvestment
Plan

The
Company maintains a dividend reinvestment and share purchase plan whereby
holders of Common Shares may automatically reinvest cash dividends into
additional Common Shares.  Under the
plan, certain investors may also make optional cash payments on a quarterly
basis to acquire even more Common Shares. 
The price of the shares sold under the plan is the average of the high
and low sale prices of the Companys Common Shares on the scheduled date of
reinvestment.

Warrants

On
March 5, 1998, the Company issued warrants to Credit Suisse First Boston
Mortgage LLC in connection with the refinancing of debt.  The warrants provide for the right to
purchase 47,500 Common Shares at a price of $5.37 per Common Share.  The warrant is exercisable at any time
through March 5, 2008.  The warrant
remains unexercised as of December 31, 2000.

On
November 16, 1998, the Company issued warrants to acquire up to 791,667 Common
Shares to each of AREE and WMC. Effective June 30, 1999, all such warrants were
returned to the Company and canceled.

In
connection with the Preferred Offering, the Company issued to a representative
of the underwriters a warrant to purchase 35,500 Class A Preferred Shares at a
price of $10.00 per share.  The warrants
issued to the underwriters representative will become exercisable one year
after date of issuance and will be exercisable for a period of four years
thereafter.  The warrants contain
provisions for (1) cashless exercise, whereby the underwriters
representative may forfeit a portion of the warrants at the time of exercise in
lieu of the cash payment of the exercise price, (2) appropriate adjustment in
the event of a merger, consolidation, recapitalization, reclassification, share
dividend, shared split or similar transaction, (3) a one-time right to demand
registration of the Common Shares underlying the warrants under the Securities
Act of 1933, and (4) participation of the Common Shares underlying such
warrant, on a piggy-back basis, in specified registrations by the Company
during the duration of the underwriters warrant and for two years thereafter.

On March 28, 2000, the Company acquired a
proprietary database from a sales and marketing companyand issued
to it 366,670 warrants to purchase the Companys Common Shares.  The warrants have an exercise price of
$6.375 per share, are immediately vested and expire at the earlier of July 1,
2005 or upon the occurrence of certain corporate events, as defined in the
warrant agreement.  The Company has the
right, for a limited time period, to buy back a portion of the shares upon
exercise of the warrant at a purchase price of $6.375.  The Company has recorded the value of the
proprietary database and is amortizing the value over a three-year period.

On
June 22, 2000, the Company acquired additional proprietary material from the
same sales and marketing company and issued to it an additional 700,000
warrants to purchase the Companys Common Shares.  One half of the warrants have an exercise price of $6.375 per
share and the remainder has an exercise price of $9.375 per share.  The warrants are immediately vested and
expire at the earlier of July 1, 2007 or upon the occurrence of certain
corporate events, as defined in the warrant agreement. The Company has recorded
the value of the proprietary material and is amortizing the value over a
three-year period.

Options

On
May 27, 1998, in accordance with the Companys former stock option plan
(Former Plan) the Company granted options as to 54,387 Common Shares to the
existing employees and Trustees of the Company. The options are exercisable on
any date through May 26, 2008 at a price of $5.37 per share.

On
November 16, 1998, the shareholders of the Company adopted the 1998 Share
Option Plan (Current Plan), which provides for the granting of share options
to officers, Trustees and employees at a price determined by a formula in the
Current Plan agreement.  The options are
to be exercisable over a period of time determined by the Current Plan
committee, but no longer than ten years after the grant date.  Compensation resulting from the share
options is initially measured at the grant date based on fair market value of
the shares.

In
connection with employment agreements entered into during 1999and in accordance
with the Current Plan, the Company issued options to purchase 80,000 Common
Shares at $2.90, a price equal to 110% of the average closing bid price of
Common Shares over the 10 trading days preceding the effective date of the
registration statement covering the Class A Preferred Shares to each of the
Companys Chief Executive Officer and President at that time.  The Chief Executive Officers options expire
on September 30, 2009 and the Presidents options expire on December 31, 2005.

In
connection with the RESoft acquisition, the Company issued to the President,
currently the Chief Knowledge Officer, options as to 1.0 million Common Shares
at a price of $5.375 per share.  The
options are exercisable as to 500,000 shares immediately, with options as to
62,500 shares exercisable quarterly, commencing May 24, 2000.  The Company also issued to the Chief
Executive Officer options as to 666,667 Common Shares at a price of $6.375 per
share.  The options are exercisable as
to 333,333 shares immediately, with options as to 41,667 shares exercisable
quarterly, commencing May 24, 2000.  The
options granted expire in February 2010. 
Further by agreement, the Company set aside a pool of options as to
200,000 Common Shares for future award to employees of RESoft.

The following summarizes the Companys
activity relative to options:



Options to Purchase Common Shares
  Weighted Average Exercise Price per Share
  Range of Exercise Price per ShareOutstanding at January 1, 1999
  54,387
  $5.37
  $5.37Granted
  160,000
  $2.90
  $2.90Outstanding at December 31, 1999
  214,387
  $3.53
  $2.90 - $5.37Granted
  1,666,667
  $5.78
  $5.375 - $6.375Outstanding at December 31, 2000
  1,881,054
  $5.52
  $2.90 - $6.375Exercisable at December 31, 1999
  134,387
  $3.90
  $2.90 - $5.37Exercisable at December 31, 2000
  1,360,221
  $5.42
  $2.90 - $6.375The
options outstanding have a weighted average remaining contractual life of 8.9
years.  The weighted average grant date
fair values for options granted during 2000 and 1999 were $0.79 and $0.83,
respectively .  As of December 31, 2000,
the Company has 1,071,339 shares available for future option grants.  No options were exercised or cancelled
during the years ended December 31, 2000 and 1999.

The
Company applies Accounting Principles Board Opinion No. 25, Accounting for
Stock Issued to Employees, in accounting for its stock incentive plans.  Accordingly, no compensation expense has
been recognized in the consolidated statements of operations.  Had compensation expense for the Companys
stock incentive plans been determined based upon the fair value at the grant
date for awards under the Stock Incentive Plans consistent with the methodology
prescribed under Statement of Financial Accounting Standards No. 123
Accounting for Stock-Based Compensation, net loss and loss per share would
have been the pro forma amounts indicated in the table below and the pro forma
compensation expense would have been equal to the difference in the as reported
and pro forma net loss amounts:

2000
  1999Net loss available to Common Shares, as
  reported
  $(8,958,511)
  $(1,386,590)Net loss available to Common Shares, pro
  forma
  (9,893,511)
  (1,620,985)Loss per share  basic and diluted, as
  reported
  (2.01)
  (1.02)Loss per share  basic and diluted, pro
  forma
  (2.22)
  (1.15)

The assumptions used in estimating the
fair value on the grant date using the Black-Scholes option-pricing model are
as follows:

2000
  1999Risk-free interest rate
  6.63%
  6.03%Expected life in years
  7.47
  3.68Expected volatility
  53.85%
  53.15%Expected dividend yield
  7.30%
  8.18%

7.  Loss Per Share

The
Company has adopted the Statement of Financial Accounting Standards No. 128,
Earnings Per Share (EPS) for all periods presented herein.  Net loss per weighted average Common Share
outstanding  basic and net loss per weighted average Common Share outstanding
- diluted is computed based on the weighted average number of Common Shares
outstanding for the period.  The
weighted average number of Common Shares outstanding for the years ended
December 31, 2000 and December 31, 1999 were 4,459,656 and 1,361,309,
respectively.  Common share equivalents
include outstanding convertible preferred shares, warrants and stock options,
and are not included in net loss per weighted average Common Share outstanding
- diluted as they would be anti-dilutive.

For the Years Ended
  December 31,2000
  1999NumeratorLoss before extraordinary loss and
  cumulative effect of change in accounting principle
  $(8,314,953)
  $(868,753)Extraordinary loss
  
  (482,272)Cumulative effect of change in accounting
  principle
  
  (35,565)Net Loss
  (8,314,953)
  (1,386,590)Preferred Share Dividends
  (643,558)
  Net loss available to Common Shareholders
  $(8,958,511)
  $(1,386,590)DenominatorWeighted average Common Shares Outstanding
  at December 31, 2000 and 1999, respectively: Basic and Diluted
  4,459,656
  1,361,309Basic and Diluted EPSNet loss available to Common Shareholders
  before extraordinary loss and cumulative effect of change in accounting
  principle
  $(2.01)
  $(0.64)Extraordinary loss
  
  (0.35)Cumulative effect of change in accounting
  principle
  
  (0.03)Net loss
  available to Common Shareholders
  $(2.01)
  $(1.02)8.  Dividends/Distributions

On
March 29, 2000, the Company declared a dividend of $0.475 per share with
respect to the Class A Preferred Shares and the Class B Preferred Shares.  The dividend with respect to the Class A
Preferred Shares and Class B Preferred Shares was paid on May 5, 2000 and June
30, 2000, respectively, to shareholders of record on April 21, 2000.

On
October 20, 2000, the Company declared a dividend of $0.475 per share with
respect to the Class A Preferred Shares. 
The dividend with respect to the Class A Preferred Shares was paid on November
15, 2000 to shareholders of record on November 1, 2000.  No Class B Preferred Shares are currently
outstanding.

During
1999, cash distributions declared totaled $0.44 per Common Share.  For the year ended December 31, 2000, no
dividends were declared on the Common Shares.

During
1999, cash distributions totaled $0.44 per Unit of the Operating
Partnership.  For the year ended
December 31, 2000, no dividends were declared on the Units.

Total
cash distributions to shareholders for the years ended December 31, 2000 and
1999 represented a 100% return of capital to the shareholders.

9. Extraordinary Loss

On
June 30, 1999, the Company recorded an extraordinary loss of $377,647
representing the unamortized deferred financing fees associated with the
expiration of the Companys non-revolving line of credit facility.

On
November 16, 1999, in connection with the sale of the Maple Grove property, the
Company paid off the mortgage loan on the property and recorded an
extraordinary loss of $104,625 representing the unamortized deferred financing
fees associated with the mortgage loan.

10.  Income Taxes

As
of December 31, 2000, deferred taxes, substantially all of which are assets,
approximate $4.3 million and resulted from differences in the recognition of
transactions for income tax and financial reporting purposes.  The principal temporary differences relates
to net operating loss carry forwards ($2.2 million), goodwill ($0.4 million),
and the timing of loss recognition on the sale of real estate assets ($1.7
million).  The Companys net operating
loss carry forwards of approximately $4.3 million as of December 31, 2000
expire in varying amounts through 2020. 
A valuation allowance for the full amount of the net deferred tax assets
has been established during the year ended December 31, 2000 due to the
uncertainty of realization.

The
tax provision differs from the expense that would result from applying Federal
statutory rates to income (loss) before taxes due to the effect of state income
taxes ($0.5 million), valuation allowances for deferred tax assets ($4.3
million), and the change in the Companys tax status due to no longer
qualifying as a REIT for Federal or state income tax purposes ($1.0 million).

11.  Related
Party Transactions

2000 Transactions

In
connection with the acquisition of RESoft on February 24, 2000, the Company
exchanged 914,292 Common Shares (valued at $4.375 per share or an aggregate of
$4.0 million) for all of the outstanding stock of RESoft.  Odeh Muhawesh and Mary Henschel, former
shareholders of NETLink, will or have received, either directly or indirectly a
significant portion of such consideration. In connection with the transaction,
Mr. Muhawesh was appointed President of the Company and was reappointed as
Chief Knowledge Officer of RESoft.  Mr.
Muhawesh is also a Trustee of the Company. 
Ms. Henschel has been the President of RESoft since February 24, 2000.

On
February 29, 2000, the Company, through the Operating Partnership, acquired the
Plymouth Properties from Plymouth Partners II, LLC, of which Steven B. Hoyt, a
Trustee of the Company is the chief manager and co-owner.  The total purchase price was $6.7 million
and was funded through the issuance of an aggregate of 181,629 units in the
Operating Partnership (valued at $4.35 per Unit, or an aggregate value of
$790,000), the assumption of certain third-party debt totaling $4.5 million
secured by the Plymouth Properties and the balance paid in cash.

On
June 30, 2000, the Company transferred and sold to WMC the Companys 100%
interest in Lake Point and 8% equity interest in Highlander.  The interests were exchanged for 95,000
shares of the Companys Class B Preferred Shares owned by WMC, including
accrued distributions, and WMC assumed the mortgage debt totaling approximately
$2.7 million associated with Lake Pointe. 
Further in connection with the dispositions, the listing agreement
between the Company and WMCs affiliate, WMC Realty, Inc., was terminated and
no brokerage commission was paid to WMCs affiliate.  Additionally, Mr. Leas resigned as Chairman of the Board, and
Robert F. Rice, the Secretary and a Trustee of the Company, entered into a
Separation Agreement with the Company pursuant to which Mr. Rice resigned as
Secretary and Trustee of the Company and received from the Company a severance
payment of $40,000.

On
December 29, 2000, the Operating Partnership sold its membership interest in
WPT I, the owner of the Thresher Property, to the Buyers, in exchange for
$169,874 in cash, 522,416 shares of common stock of the Company and 61,898 units
of WPT I, all of which will be cancelled, and the release of approximately $6.6
million of debt. In connection with the sale, cash in the amount of $805,000
securing a letter of credit granted by the Company in favor of the mortgagee of
the Thresher Property and the letter of credit will be released. Additionally,
the Company is released from its obligation to indemnify one of the Buyers,
Steven B. Hoyt, who is also a member of the Board of Trustees of the Company,
from amounts incurred by Mr. Hoyt under personal guaranties related to the
Thresher Property which remained in place after the original purchase by WPT
I.  WPT I originally purchased the
Thresher Property from the Buyers, one of which, Steve B. Hoyt, is a Trustee of
the Company.

Management Fees

On
June 30, 2000, the Company terminated its property management relationship with
WRI.

The Company maintains a property
management agreement with Hoyt Properties Inc. (Hoyt), an entity controlled
by Steven B. Hoyt, a Trustee of the Company, to serve as
property manager of the commercial properties owned by the Company.  In connection with the agreement, Hoyt
manages the day-to-day operations of the properties owned by the Company and
receives a management fee for this service. 
Management fees consisted of approximately $196,000 to Hoyt and $138,000
to WRI for the year ended December 31, 1999 and approximately $241,000 to Hoyt
and $14,000 to WRI for the year ended December 31, 2000.

Transactions between
Companies Under Common Management

RESoft
has a customer relationship in which certain members of the Companys
management performed certain management responsibilities for the customer from
approximately January 1 through June 30, 2000. 
Revenues recognized from the February 24, 2000 acquisition date through
December 31, 2000 were approximately $353,000. 
As of December 31, 2000, accounts receivable from the customer was
approximately $114,000 and amounts due to the customer was approximately
$30,000.

Rental Income

During
the year ended December 31, 2000 and December 31, 1999, the Company recognized
revenue of approximately $23,000 and $23,000, respectively, on office space
leased to Hoyt.

Rental Expense

During
the year ended December 31, 2000, the Company relocated to office space leased
by Hoyt and recognized an expense of approximately $175,000 for common area
costs and a base rent accrual.  The
Company is responsible for its pro-rata allocation of common area expenses and
is committed to a five-year lease agreement with escalating payments for a
total base rent commitment of approximately $1.2 million.

Insurance

From
time to time, the Company has purchased insurance through another affiliate of
WMC, Wellington Insurance Services, Inc., which received a commission of those
sales equal to 15% of scheduled premiums. These commissions totaled
approximately $6,000 and $10,000 for the year ended December 31, 2000 and 1999,
respectively.

Incentive Advisory
Agreement and Termination Fee

On
August 2, 1994, the Company contracted to retain WMC to serve as advisor to the
Company.  In payment for these services,
the advisor received a fee equal to 5% of the gross proceeds of the public
share offering of Common Shares, which terminated on October 1995.  In addition, the advisor was entitled to
receive an incentive advisory fee equal to 10% of the realized gain with
respect to each sale or refinancing of property owned by the Company.  In the event a property was sold at a loss,
no incentive advisory fee was earned until the amount of the loss had been
offset by gains from other sales.  In
addition, the advisor was entitled to recover certain expenses including
travel, legal, accounting and insurance. 
Fees for services, such as legal and accounting, provided by the
advisor's employees, in the opinion of the advisor, may not have exceeded fees
that would have been charged by independent third parties.

The initial term of the incentive
advisory agreement ended on December 31, 1995 and had been renewed
automatically each year.  In connection
with the purchase of properties by the Operating Partnership, the
Company terminated the incentive advisory agreement with WMC on November 20,
1998.  The termination fee, payable to
WMC, was to be determined by taking 1% of the first $150,000,000 of the
aggregate gross purchase price for properties acquired by the Operating
Partnership plus 0.25% of the aggregate gross purchase price for properties
acquired in excess of $150,000,000. 
Fees paid to terminate the incentive advisory agreement with WMC
amounted to $950,000 for the year ended December 31, 1999.  As discussed below, the 1999 fee was paid by
the issuance of 95,000 Class B Preferred Shares.

Abandoned project
pursuit costs and Reimbursement of Certain Expenses to Related Parties

During
1998 and through June 30, 1999, the Operating Partnership was in negotiations
with AREE regarding the reimbursement by the Operating Partnership to AREE of
certain costs and expenses incurred by AREE related to the potential
acquisition of properties and certain administrative expenses.  As a result of the negotiations, the
Company, through the Operating Partnership agreed to reimburse AREE for certain
costs as further discussed below.

In
connection with the negotiations during 1998 by the Company with respect to the
contribution agreement between AREE and the Operating Partnership, a $240,000
advance was paid to WMC by AREE for the benefit of the Operating
Partnership.  Under the terms of the
contribution agreement, the advance was to be repaid to AREE in the event
certain transactions closed before December 31, 1998.  The advance was written off during the year ended December 31,
1999.

In
the second quarter of 1999, due principally to the fact that the Operating
Partnership acquired only three properties since November 1998, the Company
entered into discussions with AREE and WMC. 
As a result of these discussions, the following occurred during 1999:

         Recipients
of 838,372 Units, received in the November 1998 acquisitions, returned such
Units to the Company for cancellation.         AREE
returned the warrant covering 791,667 Common Shares to the Company.  Further, the Company issued 254,800 Class B
Preferred Shares to AREE as consideration for an aggregate of $2,548,000
representing advances to the Company for working capital purposes and costs
incurred in connection with the November 1998 acquisitions and certain
abandoned project pursuit costs.         As
consideration for the termination of the advisory agreement between the Company
and WMC, WMC returned the warrant covering 791,667 Common Shares to the
Company, the Company issued 95,000 Class B Preferred Shares to WMC and WMC
retained cash payments of $550,000 received during 1998.Listing Agreements

In
January 1998, the Company entered into two listing agreements with WRI.  The agreements provided that WRI would
receive a fee equal to 3% of the sales price in the event of a sale of either
of the Companys then held residential properties, Maple Grove or Lake
Pointe.  In connection with the sale of
Maple Grove Apartments on November 16, 1999, WRI received a fee totaling
$501,000 and the agreement in regard to the Maple Grove Apartments was
terminated.

12. Rentals under operating leases

The
Company and its subsidiaries lease residential and commercial space to
individual and corporate tenants.  These
leases expire at various times through 2009. 
The following is a schedule by year of minimum rental income under such
operating leases.

Year Ending
  December 31,2001
  $1,247,8962002
  949,6262003
  765,4362004
  438,1652005
  272,965Thereafter
  194,084$3,868,172

The
total minimum future rentals presented above do not include amounts that may be
received from commercial properties as tenant reimbursements.

During
the year ended December 31, 2000, two tenants represented approximately 31.5%
of the Companys rental revenues. 
During the year ended December 31, 1999, one tenant represented
approximately 13.3% of the Companys rental revenues.

13.  Commitments and Contingencies

Licensing Agreements

On September 28, 2000, RESoft entered into
two licensing agreements with IntraNet Solutions, Inc., a software vendor
(Vendor).

The first agreement, an Application Service
Provider (ASP) Software License Agreement, granted RESoft a nontransferable
license to use the Vendors proprietary software in connection with RESofts
application software products for a two-year period in connection with RESofts
subscription services for its suite of products.  As part of this agreement, the Vendor has agreed not to solicit
another ASP that it knows would incorporate the software into a Web-based
application that would be primarily marketed to real estate owners or managers
in the United States.   RESoft paid the
Vendor a non-refundable minimum royalty of approximately $200,000 and is
obligated to pay a portion of all revenues derived from any RESoft product that
uses the Vendors proprietary software in excess of $200,000.  The Company has recorded the minimum royalty
cost as part of computer hardware, software and other fixed assets in the accompanying
consolidated balance sheet and is amortizing the cost on a straight line basis
over two years or on earned royalties, if greater.  Accumulated amortization as of December 31, 2000 was $17,000.

The second agreement, a Value Added Reseller
(VAR) License Agreement, grants RESoft the right for two years to use,
reproduce, sublicense and distribute the Vendors proprietary software in
connection with the sale of RESofts existing suite of products directly to
non-subscription based customers.  As part
of this agreement, the Vendor has agreed not to solicit another VAR which the
Vendor knows would use or distribute the software to entities in the United
States and Canada and whose primary business activity is real estate ownership
or management.  RESoft is obligated to
pay the Vendor a non-refundable, prepaid minimum royalty totaling $1.5 million
in escalating installments during the next twelve months.  RESoft is also obligated to pay the Vendor
an amount equal to its list price for the software less an agreed upon
discount.  Amounts remitted to the
Vendor under this license agreement will be credited against the $1.5 million
non-refundable, prepaid minimum royalty. 
In addition, RESofts customers can choose to receive software upgrades
and support services by paying an additional maintenance and support fee.  The Company has recorded the prepaid minimum
royalty cost as part of other assets and the remaining payments due as part of
accounts payable and accrued liabilities in the accompanying consolidated
balance sheet and is amortizing the cost on a straight line basis over two
years or on earned royalties, if greater. 
Accumulated amortization as of December 31, 2000 was $200,000.

Sales and Marketing
Contract

RESoft entered into an exclusive marketing
agreement with Venture One Real Estate, LLC (Venture One), a national real
estate brokerage firm with a national network of real estate
professionals.  The initial term of the
agreement is for three years but will renew for different periods of time depending
upon the RESoft product if certain events occur.   RESoft will pay Venture One a commission equal to 20%, 17.5% and
15% of gross collections derived from clients whether or not referred by
Venture One during the first, second and third year, respectively, after the
property is entered into RESofts system. An additional 2.5% will be paid on
gross collections for clients referred by an independent broker.

RESoft may terminate the agreement at various
times for Venture Ones failure to obtain certain sales quotas and in the event
of a change of control of RESoft.   In
either case, RESoft will continue to pay Venture One its commissions at the
applicable rate for three years for those clients existing at the date of
termination and a $400,000 termination fee. As long as Venture One continues to
meet specified sales quotas, and no change of control occurs, the agreement
shall remain in effect until August 31, 2010 unless terminated by mutual
consent.  If RESoft discontinues
marketing its suite of products, RESoft will be required to pay Venture One its
commissions at the applicable rate for three years for those clients existing
at the date of termination and a $400,000 termination fee.

Employment Agreements

The
Company has employment agreements with Duane Lund, the Chief Executive Officer
of RESoft, Mary Henschel, the President of RESoft, and Odeh Muhawesh, the Chief
Knowledge Officer of RESoft, dated February 23, 2000. The employment agreements
provide for an initial base salary of $120,000 and a discretionary performance
bonus. Additionally, each executive receives those health, life and disability
and other benefits extended by the Board of Trustees to other similarly
situated executives. The employment agreements expire on March 31, 2002. In the
event that the Company terminates the executives employment without cause or
following a change of control of the Company, the Company or, in the case of
change of control, its successor, will be obligated to pay the executives base
salary and benefits for a two-year period.

Constructive
Discharge Claim

Effective
November 10, 2000, Ann Wessels voluntarily resigned as the Chief Financial
Officer and interim acting Secretary of the Company.  Ms. Wessels believes she has been "constructively
discharged" on the basis that her duties have been diminished and has made
such claim against the Company.  The
Company believes she has voluntarily terminated her position and intends to
vigorously defend against such claim. 
In the opinion of management, the settlement of this claim will not have
a material adverse effect on the financial position or operating results of the
Company.

Legal Proceeding

On
December 29, 2000, Stonehaven notified Odeh Muhawesh, a Trustee of the Company,
that it was suspending its payment to him under a promissory note assumed by
RESoft. RESoft assumed the payment obligation in February 2000 pursuant to the
terms of the merger agreement between Company, RESoft and NETLink
International, Inc. (NETLink), a company founded and owned by Mr. Muhawesh
whereby NETLink was merged into RESoft. Management of the Company believes Mr.
Muhawesh is in default under the merger agreement for, among other things,
failure by him to cause to be transferred to RESoft 5% of the issued and
outstanding stock of MyFreeDesk.com, Inc.

Subsequently,
on January 8, 2001, Mr. Muhawesh filed a complaint against RESoft in the
District Court of Hennepin County, Minnesota alleging that RESoft failed to pay
him $350,000 on January 1, 2001 under the terms of a promissory note. The
Company has filed a counterclaim against Mr. Muhawesh requesting, among other
things, the repayment of amounts previously paid to him under the promissory
note.  The Company intends to vigorously
defend against this matter.

Legal Actions

In
the normal course of business, the Company is involved in legal actions arising
from the ownership of its properties. 
In managements opinion, the liabilities, if any, that may ultimately
result from such legal actions are not expected to have a materially adverse
effect on the consolidated financial position, operations or liquidity of the
Company.

14.     Supplemental
Information to Statements of Cash Flows



For the Years Ended
  December 31,2000
  1999Interest paid
  $1,789,504
  $2,593,502Supplemental schedule of non-cash investing
  and financing activities:Dividends and distributions payable
  $709,139
  $861,828Sales and marketing warrant valuation
  $682,338
  $-Software licensing prepaid minimum royalty
  $1,500,000
  $-The following assets and liabilities were
  assumed in connection with the acquisition of RESoft:Furniture and equipment
  $(74,672)
  $-Accounts receivable
  (430,888)
  -Goodwill
  (4,499,777)
  -Other assets
  (74,604)
  -Line of credit
  68,466
  -Related party note payable
  750,000
  -Other liabilities
  422,233
  -Common Shares
  9,143
  -Additional paid in capital
  3,990,858
  -Cash proceeds received from acquisition of
  consolidated subsidiary
  $160,759
  $-The following assets and liabilities were
  assumed in connection with the acquisition of the Plymouth Properties and
  additions to other properties:Purchase of real estate
  $(6,772,313)
  $-Additions to real estate
  (3,254)
  -Mortgage notes payable
  4,471,694
  -Minority interests
  794,627
  -Common Shares
  429
  -Additional paid in capital
  149,571
  -Acquisition of and additions to real estate
  properties
  $(1,359,246)
  $-For the Years Ended
  December 31,2000
  1999The following assets and liabilities were
  disposed of in connection with the dispositions of Maple Grove, Lake Pointe,
  Highlander and the Thresher Property:Disposition of real estate
  $16,575,767
  $14,953,942Disposition of investment in unconsolidated
  subsidiary
  95,756
  -Restricted cash
  582,965
  208,415Deferred costs and other assets
  244,710
  -Mortgage note payable
  (9,289,460)
  (12,629,744)Accounts payable and accrued liabilities
  (62,972)
  -Security deposits
  (43,914)
  (80,853)Dividends paid
  (45,000)
  -Preferred Shares
  (950)
  -Common Shares
  (5,224)
  -Additional paid in capital
  (7,880,679)
  -Gain on sale of investment in real estate
  -
  686,716Dispositions of real estate properties
  $170,999
  $3,138,476Conversion of Class A Preferred Shares for
  Common Shares:Preferred Shares
  $(3,755)
  $(10)Common Shares
  26,933
  34Additional paid in capital
  (23,178)
  (24)$-
  $-In connection with agreements during 1999,
  the following chares were financed:Termination of incentive advisory contract
  for Class B Preferred Shares:Incentive advisory agreement termination
  fee
  $-
  $(950,000)Preferred Shares
  -
  950Additional pain-in-capital
  -
  949,050$-
  $-In connection with agreements during 1999,
  the following charges were financed:Nonrecurring charges paid through issuance
  of Class B Preferred Shares:Abandoned project pursuit costs
  $-
  $(2,548,000)Preferred Shares
  -
  2,548Additional paid-in-capital
  -
  2,545,452$-
  $-15.  Information by Business Segment

In
June 1997, the FASB issued Statement of Financial Accounting Standards No. 131,
Disclosure about Segments of an Enterprise and Related Information.  This statement requires that a public
business enterprise report financial and descriptive information about its
reportable operating segments. 
Generally, financial information is required to be reported on the basis
that it is used internally for evaluating segment performance and deciding how
to allocate resources to segments. 
Management views the operations of its commercial real estate and
technology operations as two segments.

Commercial Real
  Estate
  Technology
  TotalYear ended December 31, 2000Revenues
  $5,483,239
  $2,632,825
  $8,116,064Operating expenses
  2,182,761
  2,414,741
  4,597,502Income from operations
  $3,300,478
  $218,084
  $3,518,562Segment assets at December 31, 2000
  $22,208,316
  $5,935,731
  $28,144,047Year ended December 31, 1999Revenues
  $6,896,557
  $-
  $6,896,557Operating expenses
  3,052,547
  -
  3,052,547Income from operations
  $3,844,010
  $-
  $3,844,010The following table reconciles income
from operations for reportable segments to loss from operations as reported in
the Consolidated Statements of Operations.

For the Years Ended
  December 31,2000
  1999Income from operations for reportable
  segments
  $3,518,562
  $3,844,010Add:Equity in income of unconsolidated
  subsidiary
  2,912
  10,269Minority interests
  571,333
  2,721,695Less:General and administrative
  (2,969,153)
  (801,032)Interest
  (1,790,804)
  (2,556,624)Product development
  (396,181)
  -Termination of advisory agreement
  -
  (950,000)Nonrecurring expenses
  (408,415)
  (2,613,383)Amortization
  (1,629,539)
  (1,124,818)Depreciation
  (952,758)
  (85,586)Loss from operations
  $(4,054,043)
  $(1,555,469)

16.Quarterly data (Unaudited)

Years Ended
  December 31, 2000First Quarter
  Second Quarter
  Third Quarter
  Fourth QuarterTotal revenues
  $1,743,588
  $2,119,958
  $1,950,620
  $2,301,898Equity in income of unconsolidated
  subsidiary
  1,856
  1,056
  
  Loss allocated to minority interest
  160,377
  65,110
  88,268
  257,578Loss from operations
  (136,992)
  (1,321,775)
  (1,501,751)
  (1,093,525)Loss on sale of investment in real estate
  
  
  
  (4,260,910)Net loss
  (136,992)
  (1,321,775)
  (1,501,751)
  (5,354,435)Preferred Share dividends
  (328,495)
  
  (315,063)
  Net loss available to Common Shareholders
  $(465,487)
  $(1,321,775)
  $(1,816,814)
  $(5,354,435)Net loss available to Common Shareholders
  per Common Share:Basic and Diluted
  $(0.16)
  $(0.27)
  $(0.36)
  $(1.08)17.  Subsequent Event

On
January 8, 2001, the Company entered into an agreement through the Operating
Partnership to transfer and sell to an unrelated third party the St. Cloud,
Minnesota real property.  In exchange
for the real property, the Company will receive approximately $8.3
million.  In addition, the Company will
repay the outstanding mortgage indebtedness of approximately $7.3 million.  The Company has recorded an expected loss on
the sale of the investment in the real estate in the fourth quarter of 2000 of
approximately $4.3 million in the accompanying consolidated financial
statements.